TX HB5502

Eliminates the automatic percentage increases (8% for special taxing units, 3.5% for other units) previously built into voter-approval tax rate calculations, setting the voter-approval rate equal to the no-new-revenue maintenance and operations rate plus the current debt rate

Removes "new property value" from tax rate calculation formulas, meaning new construction and improvements will no longer be excluded when calculating no-new-revenue and voter-approval tax rates

Requires an automatic election for voter approval whenever any taxing unit adopts a tax rate exceeding the voter-approval tax rate, eliminating distinctions based on municipality population size and special taxing unit status

Repeals the "unused increment rate" provision that allowed taxing units to bank unused tax rate capacity from previous years, and eliminates the "de minimis rate" exception for smaller taxing units

Applies to water districts by requiring elections when adopted tax rates would result in any tax increase on the average residence homestead from the preceding year, removing the previous 8% or 3.5% thresholds

Takes effect January 1, 2026, and applies to ad valorem taxes imposed for tax years beginning on or after that date