taxesProperty Tax Assistance

Tax Rate Calculation

Truth-in-taxation requires most taxing units to calculate two rates after receiving a certified appraisal roll from the chief appraiser — the no-new-revenue tax rate and the voter-approval tax rate. 1 The type of taxing unit determines which truth-in-taxation steps apply.

Cities, counties and hospital districts may levy a sales tax specifically to reduce property taxes. 2 These taxing units reduce the no-new-revenue rate in the first year only and voter-approval tax rates every year thereafter to account for the property tax reduction paid for by the expected sales tax revenue.

Any taxing unit may increase its voter-approval tax rate for maintenance and operations (M&O) funds used to pay for a facility, device or method for the control of air, water or land pollution. 3 The taxing unit must provide its tax assessor with a copy of a determination letter from the Texas Commission on Environmental Quality stating the portion of the cost of the installation for pollution control. 4

A county may increase its no-new-revenue M&O tax rate, and therefore its voter-approval tax rate, for funds used to pay for the state criminal justice mandate, indigent health care, indigent defense and a county hospital. Other taxing units that pay for indigent health care may also increase their no-new-revenue M&O tax rate.

Generally, tax rate calculations for water districts are governed by the Water Code instead of Tax Code. Water Code Sections 49.107(g) and 49.108(f) provide that Tax Code Sections 26.04, 26.05 and 26.07 do not apply to taxing units created under Water Code Section 49.001 that levy and collect taxes under Water Code Section 49.107 or 49.108. Information regarding water district calculations can be found in the Water District Voter-Approval Tax Rate section below.

By providing the information below, the Comptroller's office provides technical assistance and not legal advice. Taxing unit should consult legal counsel for interpretations of law regarding tax rate calculations.