Proposing a constitutional amendment authorizing the legislature to increase the amount of the exemption from ad valorem taxation by a school district of the market value of the residence homestead of a person who is elderly or disabled.
LowStandard timeline
Low Cost
Effective:2025-09-01
Enforcing Agencies
Texas Comptroller of Public Accounts • County Tax Assessor-Collectors • School District Tax Offices
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date:September 1, 2025 (Legislative Resolution); January 1, 2025 (Retroactive Tax Year Application).
Compliance Deadline:November 4, 2025 (Election Day). If approved, mortgage servicers and tax offices must immediately reconcile 2025 tax bills against the new exemption levels before year-end.
Agency Rulemaking: The Texas Comptroller and local Appraisal Districts must issue guidance on handling "split-roll" billing or refunds if tax statements are mailed prior to the November election results.
Immediate Action Plan
Immediate: Audit loan portfolios to identify all accounts currently benefiting from the Over-65 or Disabled Person homestead exemption.
Q3 2025: Update escrow analysis software to handle a potential mid-cycle tax rate change retroactive to January 1.
October 2025: If you are a Tax Assessor-Collector, prepare two versions of the tax roll: one under current law and one reflecting the SJR85 exemption increase.
Post-Election (Nov 2025): If passed, immediately initiate escrow surplus processing to avoid RESPA violations regarding maximum cushion requirements.
Operational Changes Required
Contracts
Mortgage Servicing Agreements: Review "Escrow Surplus" clauses. The retroactive tax cut will likely generate escrow overages. You must determine if your current contracts allow for immediate refunding or if you are required to hold the surplus until the annual analysis.
School District Bond Covenants: If you hold or underwrite school district debt, review "impairment of obligation" clauses. The amendment permits the continued levy of taxes on the exempted value *only* if necessary to prevent default on existing debt.
Hiring/Training
Customer Service (Lenders/Servicers): Train staff to handle inquiries regarding escrow recalculations. Borrowers will expect immediate payment reductions post-election; staff must explain the timeline for escrow analysis.
Tax Consultants: Staff must be trained to calculate 2025 liabilities using both the current $10,000 exemption and the proposed $60,000 exemption to provide accurate "best/worst case" scenarios for clients.
Reporting & Record-Keeping
Portfolio Segmentation: Mortgage lenders must immediately tag loans associated with borrowers claiming "Over 65" or "Disabled Person" exemptions to facilitate rapid bulk-processing of escrow adjustments in Q4 2025.
Tax Certificates: Real estate closings occurring between Jan 1, 2025, and Nov 4, 2025, will rely on tax certificates that do *not* reflect the exemption increase. Closing documents should include disclosures regarding potential future tax adjustments.
Fees & Costs
Administrative Costs: Expect increased overhead related to re-issuing tax statements (for Tax Assessor-Collectors) or running off-cycle escrow analyses (for Lenders).
No Direct Fee Increases: The legislation does not impose new filing fees on businesses.
Strategic Ambiguities & Considerations
The "Bill-Then-Correct" Gap: Tax bills are typically mailed in October. The election is in November. It is currently unclear if Tax Assessor-Collectors will mail bills based on current law (requiring a subsequent refund/correction) or delay billing until post-election. Prepare for a chaotic Q4 billing cycle.
"Economic Need" Authority: The amendment text authorizes the Legislature to limit the exemption based on "economic need." While the current political intent is a blanket increase, the constitutional language permits future means-testing without a new voter referendum. Watch enabling legislation (SB 23) for income caps.
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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
S.J.R. 85 seeks to propose an amendment to the Texas Constitution to authorize the legislature to increase the additional homestead exemption for over-65 and disabled homestead property owners from $10,000 to $60,000.
S.J.R. 85 proposes a constitutional amendment authorizing the legislature to increase the amount of the exemption from ad valorem taxation by a school district of the market value of the residence homestead of a person who is elderly or disabled.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
(c) Authorizes the legislature by general law, in addition to this exemption of the market value of the residence homestead of a married or unmarried adult, to exempt an amount not to exceed $60,000, rather than $10,000, of the market value of the residence homestead of a person who is disabled as defined in Subsection (b) (relating to authorizing the governing body of any county, city, town, school district, or other political subdivision of the state to make certain exemptions) of Section 1-b (Residence Homestead Tax Exemptions and Limitations) and of a person 65 years of age or older from ad valorem taxation for general elementary and secondary public school purposes.
SECTION 2. Provides that the following temporary provision is added to the Texas Constitution:
TEMPORARY PROVISION. (a) Provides that this temporary provision applies to the constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, authorizing the legislature to increase the amount of the exemption from ad valorem taxation by a school district of the market value of the residence homestead of a person who is elderly or disabled.
(b) Effective date, the amendment to Section 1-b(c), Article VIII (Taxation and Revenue), of this constitution: January 1, 2025.
(c) Provides that this temporary provision expires January 1, 2027.
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.
Honorable Paul Bettencourt, Chair, Senate Committee on Local Government
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SJR85 by Bettencourt (Proposing a constitutional amendment authorizing the legislature to increase the amount of the exemption from ad valorem taxation by a school district of the market value of the residence homestead of a person who is elderly or disabled.), As Introduced
No fiscal implication to the State is anticipated, other than the cost of publication.
The cost to the state for publication of the resolution is $191,689.
The resolution would propose an amendment to the Texas Constitution to authorize the Legislature by general law to increase the amount of the school district residence homestead exemption for persons aged 65 or older or disabled from $10,000 to $60,000.
The proposed amendment, in and of itself, would have no fiscal impact on the state or units of local government. Any fiscal impact would depend on, and be associated with, the corresponding enabling legislation (SB 23).
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
JMc, SZ, SD, BRI
Related Legislation
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SJR85 proposes a Constitutional Amendment to increase the school district residence homestead exemption for individuals over 65 or disabled from $10,000 to $60,000. While contingent on voter approval in November 2025, the amendment contains a retroactive provision applying the tax cut to the entire 2025 tax year, creating immediate operational requirements for mortgage servicers managing escrow accounts and tax professionals projecting liabilities. Implementation Timeline Effective Date: September 1, 2025 (Legislative Resolution); January 1, 2025 (Retroactive Tax Year Application).
Q
Who authored SJR85?
SJR85 was authored by Texas Senator Paul Bettencourt during the Regular Session.
Q
When was SJR85 signed into law?
SJR85 was signed into law by Governor Greg Abbott on May 22, 2025.
Q
Which agencies enforce SJR85?
SJR85 is enforced by Texas Comptroller of Public Accounts, County Tax Assessor-Collectors and School District Tax Offices.
Q
How urgent is compliance with SJR85?
The compliance urgency for SJR85 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SJR85?
The cost impact of SJR85 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does SJR85 address?
SJR85 addresses topics including aging, disabilities, persons with, property interests, property interests--homestead and resolutions.
Legislative data provided by LegiScanLast updated: November 25, 2025
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