SJR2

Regular Session

Proposing a constitutional amendment to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district.

ModeratePlan for compliance

Low Cost

Effective:2025-09-01

Enforcing Agencies

Texas Comptroller of Public Accounts • County Appraisal Districts • School District Tax Assessor-Collectors

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: Retroactive to January 1, 2025 (contingent on voter approval).
Compliance Deadline: November 5, 2025. Systems must be ready to process tax adjustments and RESPA refunds immediately following the election.
Agency Rulemaking: The Texas Comptroller is expected to issue guidance to Appraisal Districts in Q3 2025 regarding whether October tax bills should reflect current law ($100k) or anticipated law ($140k) with a clawback provision.

Immediate Action Plan

Update Escrow Logic: Immediately program servicing platforms to accommodate a "split" tax cycle (initial bill vs. post-election adjustment).
Draft Borrower Communications: Prepare templates now to notify borrowers that their October tax bill may be overstated pending the November election results.
Review Proration Clauses: Direct outside counsel to draft specific addenda for 2025 residential closings to clarify buyer/seller rights to retroactive tax savings.
Commercial Audit: Commercial owners should review NNN lease caps and prepare for 2026 appraisal protests, anticipating a shift in tax burden.

Operational Changes Required

Contracts

Real Estate Purchase Agreements: For closings occurring in 2025, proration clauses must be reviewed. Standard language may not adequately address who is entitled to the refund if the seller pays taxes based on the $100k exemption at closing, but the liability is retroactively reduced to the $140k level post-closing.

Hiring/Training

Customer Service (Servicing): Train staff to handle borrower confusion in October 2025. Borrowers will likely receive tax bills that do not yet reflect the $140k exemption. Staff must be scripted to explain the "vote-then-adjust" process.
Escrow Analysis: Staff must be trained on short-year statement generation to handle the off-cycle adjustment.

Reporting & Record-Keeping

Escrow Refunds (RESPA): If the amendment passes, tax liabilities will drop. Servicers must perform off-cycle escrow analyses. Any surplus over $50 created by the retroactive tax cut must be refunded to the borrower within 30 days of the analysis.
Closing Disclosures (CDs): For 2025 originations, continue to disclose "Projected Payments" based on current law ($100k exemption) to avoid under-collection, but document the potential reduction in the loan file.

Fees & Costs

Administrative Overhead: Budget for increased mailing and processing costs in Q4 2025/Q1 2026 due to the requirement to send corrected escrow statements and refund checks.

Strategic Ambiguities & Considerations

The "Billing Gap": The law does not explicitly mandate how Tax Assessor-Collectors should handle the October billing cycle prior to the November vote. Some counties may bill the full amount; others may delay. This lack of uniformity will complicate automated tax disbursements for national servicers.
Commercial Cost-Shifting: While this bill benefits homeowners, the "hold harmless" funding (SB 4) may not fully cover district revenue losses. Commercial property owners should anticipate aggressive valuation increases in the 2026 appraisal cycle as districts seek to recover revenue equilibrium.

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Legislative Timeline

This bill's path through the Texas Legislature

Passed House

Passed House

TopicsEducation Education--primary & Secondary Education--primary & Secondary--finance Resolutions Resolutions--constitutional Amendments Taxation Taxation--property-appraisals & Appraisal Districts Taxation--property-exemptions Taxation--school District Property Interests Property Interests--homestead

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

Senate Research Center	S.J.R. 2
89R8155 LHC-D	By: Bettencourt et al.
	Local Government
	2/7/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The 84th Legislature passed and voters approved increasing the residence homestead exemption from $15,000 to $25,000 in 2015. Similarly, the 87th Legislature passed S.J.R. 2 and was approved by voters in May 2022 increasing the exemption again up to $40,000 per homestead. In the 88th Legislature, Second Called Session, the legislature again raised, and the voters approved, the homestead exemption to $100,000.

S.J.R. 2 will ask the voters to increase the residence homestead exemption up to $140,000. S.B. 4 is the enabling legislation for S.J.R. 2. Included in S.B. 4 is a hold-harmless to school districts�the state will make up any formula funding deficit a school district might incur as a result of this exemption increase, including I&S.

S.B.1, the General Appropriations Act, contains a provision to provide 6.8 pennies of school district tax rate compression through the state compression percentage (SCP), which will reduce statewide average ISD tax rates from $.9766[1] to $.9086. The additional 6.8 pennies of compression will provide $133.13 in estimated savings to the average homestead property.[2][3]

This increase in homestead exemption amount will provide an estimated savings of $363.44 to a homeowner's school tax at the statewide ISD average tax rate of $.9086.

Combining the $133.13 in average savings attributable to ISD rate compression in S.B. 1 with the $363.44 in savings attributable to the increased homestead exemption in S.B. 4, the combined estimated savings for the average homestead property owner totals $496.57.[4]

S.B. 2, 88(2), contained a provision that will continue to automatically provide savings attributable to an increased homestead exemption to over-65 and disabled homestead exemption owners. As local values rise, and tax rates compress in a school district, over-65 and disabled homestead freeze values automatically adjust to provide savings attributable to compression.

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S.J.R. 2 seeks to increase the constitutional residence homestead exemption amount to $140,000.

S.B. 4 is the enabling legislation for S.J.R. 2.

Footnotes:

[1] https://comptroller.texas.gov/taxes/property-tax/rates/index.php

2024 School District Rates and Levies Report

Statewide ISD average tax rate calculated by Local Government Committee staff

[2] 2025 average home market value - $335,773

Roberson, J., Kallur, R., & Wu, J. (2025, January 13). Texas Housing Insight.

Retrieved January 15, 2025, from https://trerc.tamu.edu/wp-content/uploads/2024/11/2120-202410.pdf

[3] 2025 average home taxable value, including $140,000 homestead exemption - $195,773

[4] Savings estimates calculated by Senator Bettencourt�s Office

S.J.R. 2 proposes a constitutional amendment to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 1-b(c), Article VIII, Texas Constitution, to increase from $100,000 to $140,000 the amount of market value of the residence homestead of a married or unmarried adult, including one living alone, that is exempt from ad valorem taxation for general elementary and secondary public school purposes.

SECTION 2. Adds the following temporary provision to the Texas Constitution:

TEMPORARY PROVISION. (a) Provides that this temporary provision applies to the constitutional amendment proposed by S.J.R. 2, 89th Legislature, Regular Session, 2025.

(b) Provides that the amendment to Section 1-b(c), Article VIII (Taxation and Revenue), of this constitution takes effect for the tax year beginning January 1, 2025.

SECTION 3. Requires that the proposed constitutional amendment be submitted to the voters at an election to be held November 4, 2025. Sets forth the required language of the ballot.

House Sponsors

Rep. Phil KingRepublican · Primary Sponsor

Joint Sponsors

Cosponsors (101)

Bill Text(with markup)

S.J.R. No. 2

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original


	proposing a constitutional amendment to increase the amount of the
	exemption of residence homesteads from ad valorem taxation by a
	school district.
	BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 1-b(c), Article VIII, Texas
	Constitution, is amended to read as follows:
	(c) The amount of $140,000 [~~$100,000~~] of the market value of
	the residence homestead of a married or unmarried adult, including
	one living alone, is exempt from ad valorem taxation for general
	elementary and secondary public school purposes. The legislature
	by general law may provide that all or part of the exemption does
	not apply to a district or political subdivision that imposes ad
	valorem taxes for public education purposes but is not the
	principal school district providing general elementary and
	secondary public education throughout its territory. In addition
	to this exemption, the legislature by general law may exempt an
	amount not to exceed $10,000 of the market value of the residence
	homestead of a person who is disabled as defined in Subsection (b)
	of this section and of a person 65 years of age or older from ad
	valorem taxation for general elementary and secondary public school
	purposes. The legislature by general law may base the amount of and
	condition eligibility for the additional exemption authorized by
	this subsection for disabled persons and for persons 65 years of age
	or older on economic need. An eligible disabled person who is 65
	years of age or older may not receive both exemptions from a school
	district but may choose either. An eligible person is entitled to
	receive both the exemption required by this subsection for all
	residence homesteads and any exemption adopted pursuant to
	Subsection (b) of this section, but the legislature shall provide
	by general law whether an eligible disabled or elderly person may
	receive both the additional exemption for the elderly and disabled
	authorized by this subsection and any exemption for the elderly or
	disabled adopted pursuant to Subsection (b) of this section. Where
	ad valorem tax has previously been pledged for the payment of debt,
	the taxing officers of a school district may continue to levy and
	collect the tax against the value of homesteads exempted under this
	subsection until the debt is discharged if the cessation of the levy
	would impair the obligation of the contract by which the debt was
	created. The legislature shall provide for formulas to protect
	school districts against all or part of the revenue loss incurred by
	the implementation of this subsection, Subsection (d) of this
	section, and Section 1-d-1 of this article. The legislature by
	general law may define residence homestead for purposes of this
	section.
	SECTION 2. The following temporary provision is added to
	the Texas Constitution:
	TEMPORARY PROVISION. (a) This temporary provision applies
	to the constitutional amendment proposed by S.J.R. 2, 89th
	Legislature, Regular Session, 2025.
	(b) The amendment to Section 1-b(c), Article VIII, of this
	constitution takes effect for the tax year beginning January 1,
	2025.
	(c) This temporary provision expires January 1, 2027.
	SECTION 3. This proposed constitutional amendment shall be
	submitted to the voters at an election to be held November 4,
	2025. The ballot shall be printed to permit voting for or against
	the proposition: "The constitutional amendment to increase the
	amount of the exemption of residence homesteads from ad valorem
	taxation by a school district from $100,000 to $140,000."

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


February 10, 2025

TO:	Honorable Paul Bettencourt, Chair, Senate Committee on Local Government

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SJR2 by Bettencourt (Proposing a constitutional amendment to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district.), As Introduced

The approval of the proposed amendment by the voters would, in and of itself, result in a reduction of school district property tax revenue and a partial reimbursement of that lost revenue by the state. Although the resolution is self-enabling, the fiscal impact is shown in the fiscal note for SB 4.

The cost to the state for publication of the resolution is $191,689.

The resolution would propose an amendment to Article VIII of the Texas Constitution to increase the residence homestead exemption from school district property taxation from $100,000 to $140,000.

The proposed amendment would be submitted to voters at an election to be held November 4, 2025, and would be effective for the tax year beginning January 1, 2025, if passed.

Local Government Impact

The fiscal impact to school districts is shown in the fiscal note for SB 4.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, SZ, SD, BRI

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Frequently Asked Questions

Common questions about SJR2

What does Texas SJR2 do?

SJR 2 proposes a constitutional amendment increasing the school district residence homestead exemption from $100,000 to $140,000, contingent on November 2025 voter approval but applying retroactively to the tax year beginning January 1, 2025. Mortgage lenders, servicers, and title companies face a significant operational "compliance gap" in Q4 2025, requiring systems capable of handling initial tax bills at the old rate followed by retroactive adjustments and escrow refunds immediately post-election. Implementation Timeline Effective Date: Retroactive to January 1, 2025 (contingent on voter approval).

Who authored SJR2?

SJR2 was authored by Texas Senator Paul Bettencourt during the Regular Session.

When was SJR2 signed into law?

SJR2 was signed into law by Governor Greg Abbott on May 22, 2025.

Which agencies enforce SJR2?

SJR2 is enforced by Texas Comptroller of Public Accounts, County Appraisal Districts and School District Tax Assessor-Collectors.

How urgent is compliance with SJR2?

The compliance urgency for SJR2 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SJR2?

The cost impact of SJR2 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SJR2 address?

SJR2 addresses topics including education, education--primary & secondary, education--primary & secondary--finance, resolutions and resolutions--constitutional amendments.

Legislative data provided by LegiScanLast updated: November 25, 2025

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