economy Economic Development

Property Tax Abatement Act, Tax Code Chapter 312 Overview

A tax abatement is a local agreement between a taxpayer and a taxing unit that exempts all or part of the increase in the value of the real property and/or tangible personal property from taxation for a period not to exceed 10 years. Tax abatements are an economic development tool available to cities, counties and special districts to attract new industries and to encourage the retention and development of existing businesses through property tax exemptions or reductions. School districts may not enter into abatement agreements.

Local governments often use property tax abatements to attract new industry and commercial enterprises and to encourage the retention and development of existing businesses. Incorporated cities, counties and special districts are allowed to enter into tax abatement agreements. School districts cannot enter tax abatement agreements. While tax abatements are short-lived, they can have a significant future impact.

New Abatement Legislation Notice for Local Governments

Recently enacted House Bill 3143, which went into effect Sept. 1, 2019, added additional public notice, hearing and reporting requirements for certain tax abatement agreements.

Below are three key highlights:

Requirements for Delivering a Report on Appraised Value of Property with an Expired Abatement

This item requires that:

  • For each of the first three years following the expiration of a tax abatement agreement, the chief appraiser of each appraisal district delivers a report to the Comptroller's office containing the appraised value of the property that was subject to the agreement. To meet this requirement and to make sure that all property values are finalized, fill out form 50-278, and submit it to the Comptroller's office by Sept. 1 or the first business date thereafter if Sept. 1 falls on a weekend or a federal holiday.
  • This report applies to all tax abatement agreements that expire on or after Sept. 1, 2019

If you have questions, call Frank Alvarez at 844-519-5672, ext. 6-9231.

Public Notice and Hearing Requirements

Changes to this item require that:

  • Each city and county public notice provides at least 30 days before the scheduled time of a meeting regarding approval of an abatement.
  • The public notice contains: 1) the name of the property owner that would be party to the agreement; 2) the name and location of the reinvestment zone in which the property is located; and 3) a general description of the nature and estimated costs of the improvements in the agreement.
  • The governing body of a city or county conducts a public hearing at which the public is given an opportunity to be heard if the governing body wishes to adopt, amend, repeal or reauthorize the guidelines and criteria for a reinvestment zone and abatement.
  • A taxing unit with an internet website posts the current version of the guidelines and criteria governing the tax abatement agreements.

Expiration Date Extension

This chapter, Tax Code Chapter 312, was extended until Sept. 1, 2029.

When and whether to file an Appraised Property Value Post Abatement Report (Form #50-278)

  • The earliest date that the first of the three annual reports may be submitted to the Comptroller's office is Sept. 1, 2020, since the new legislation took effect Sept. 1, 2019.
  • Hence, if an abatement expired on Sept. 1, 2019, then the first report can be submitted on Sept. 1, 2020.
  • If a local abatement expired on Jan. 1, 2020, the first report is to be submitted on Jan. 1, 2021.
  • If your abatement expired BEFORE Sept. 1, 2019, then you DO NOT need to fill out Form 50-278.
  • If you have NO abatements, then you DO NOT need to file a report.
  • For more information about form 50-278, read the FAQ.

Need Help?

For additional information, contact the Data Analysis and Transparency Division via email or at 844-519-5672, ext. 6-9231.

Disclaimer

This information should not be construed as, and is not a substitute for, legal advice.

Property owners and school districts are urged to consult the Attorney General's Economic Development Handbook and their own legal counsel for any questions or interpretations of economic development laws.