Texas Tax Code 26.05: Deadline, Motion Wording, and Vote Rules

Texas Tax Code Section 26.05 is the statute that tells every county, city, school district, and other local taxing unit how to formally adopt its annual property tax rate. It fixes the adoption deadline, splits the rate into two components that must be voted on separately, prescribes the wording that has to appear in the ordinance and in the motion, sets the vote threshold, and gives property owners a direct injunction remedy when the taxing unit gets any of it wrong.¹

Deadline to Adopt the Rate

A taxing unit must adopt its tax rate before the later of September 30 or the 60th day after it receives the certified appraisal roll from its appraisal district. One exception overrides that window: if the governing body intends to adopt a rate that exceeds the voter-approval tax rate, the rate must be adopted no later than the 71st day before the November uniform election date, because exceeding that threshold triggers a mandatory voter election that has to be ordered in time.¹

What Happens If the Deadline Is Missed

Section 26.05(c) removes local discretion when the governing body fails to adopt a rate on time. The rate automatically becomes the lower of the current year’s no-new-revenue tax rate or the rate the taxing unit adopted the previous year. The default rate is treated as if it had been formally adopted, and the governing body still has five days to ratify it using the same ordinance procedures required for any other adopted rate.² The practical consequence is that a taxing unit cannot gain revenue by letting the deadline slide. Missing the window almost always locks in a lower rate than the governing body intended.

The Two Rate Components

Under Section 26.05(a), every property tax rate is split into two parts, and each part must be approved separately by the governing body:¹

The debt service rate, sometimes called the Interest and Sinking (I&S) rate, which funds principal and interest payments on voter-approved bonds for things like school buildings, roads, and infrastructure.
The maintenance and operations (M&O) rate, which funds the taxing unit’s day-to-day expenses, including salaries, programs, and operating costs.

These components have to appear separately in the ordinance so taxpayers can see how much of the bill covers ongoing operations and how much covers long-term debt. If the governing body wants to approve a debt service rate higher than what Section 26.05(a)(1) calculates, at least 60 percent of the body must vote in favor, and the motion has to state the calculated rate, the proposed rate, the difference, and the purpose for the extra revenue.¹

What Must Appear in the Ordinance

The ordinance, resolution, or order that sets the tax rate has to meet precise content and formatting requirements under Section 26.05(b). The vote adopting the tax rate must be separate from the vote adopting the budget.¹

When the adopted rate will raise more M&O taxes than the prior year, the document must contain a specific statement, printed in type larger than any other text in the document, saying that the rate will raise more taxes for maintenance and operations than the previous year’s rate. If the rate also exceeds the no-new-revenue M&O rate, a second statement in the same oversized type has to show the effective percentage increase and the approximate dollar impact on a $100,000 home. The same disclosures must then be posted on the homepage of the taxing unit’s website once the rate is adopted.²

The Required Motion Wording

When a governing body votes to adopt a rate that exceeds the no-new-revenue tax rate, the motion itself has to use a prescribed form. The member making the motion must state the specific rate being proposed and the percentage by which it exceeds the no-new-revenue rate. The required phrasing identifies the action as a property tax increase rather than a routine rate adoption.² This is one of the details that trips up smaller taxing units. Using informal or generic motion language when the rate exceeds the no-new-revenue threshold can create a procedural defect in the adoption.

Record Vote and the 60 Percent Threshold

The vote adopting the tax rate must be a record vote, with each member’s individual position documented. A simple majority is enough when the adopted rate stays at or below the no-new-revenue tax rate. Once the rate exceeds that benchmark, at least 60 percent of the governing body must vote in favor for the adoption to be valid.¹

When a Public Hearing Is Required

Section 26.05(d) bars a taxing unit other than a school district from adopting a rate that exceeds the lower of the voter-approval tax rate or the no-new-revenue tax rate without first holding a public hearing and complying with the notice requirements in Sections 26.06 and 26.065.¹ If the adopted rate stays at or below both benchmarks, no hearing is required.

The hearing has to take place on a weekday that is not a public holiday, inside the taxing unit’s boundaries, in a publicly owned building or a building normally open to the public. The governing body must give proponents and opponents of the proposed increase an adequate opportunity to speak,³ and a quorum of the governing body must be present.⁴ Published notice is required at least five days ahead of the hearing, with specific size and content rules in Section 26.06.

When Adoption Triggers an Election

For taxing units other than school districts, going above the voter-approval tax rate does more than require a supermajority vote and a hearing. It also triggers a mandatory election under Section 26.07. The specific trigger depends on the kind of taxing unit:⁵

For special taxing units and cities with 30,000 or more residents, an election is triggered whenever the adopted rate exceeds the voter-approval tax rate.
For other taxing units, including cities under 30,000, an election is triggered only when the adopted rate exceeds the greater of the voter-approval tax rate or the de minimis rate.

The de minimis rate equals the no-new-revenue M&O rate plus the rate needed to generate $500,000, plus the current debt rate.⁶ A small city that needs to cover an unusual expense can sometimes stay under the de minimis rate and avoid an election even if it exceeds the voter-approval rate. The election is held on the November uniform election date, and the order calling the election must be issued no later than 71 days before that date. If voters reject the rate, the taxing unit’s rate drops to the voter-approval rate for that year.⁵

How School Districts Fit In

School districts follow Section 26.05 with several carve-outs. They are exempt from the Section 26.05(d) public hearing requirement that applies to other taxing units, because their hearing and notice obligations run through the Education Code instead. The 60 percent supermajority vote still applies to school districts, but the threshold that triggers it is calculated under an Education Code formula rather than the standard no-new-revenue rate. Section 26.05(g) also lets a school district adopt its tax rate before receiving the certified appraisal roll, provided the chief appraiser has given the district a certified estimate of taxable value. When a district uses that option, both the no-new-revenue rate and the voter-approval rate are calculated from the estimate rather than the final certified roll.²

Injunction Remedy for Property Owners

Section 26.05(e) gives property owners a direct legal remedy when a taxing unit skips or mishandles any step of the adoption process. Anyone who owns taxable property in the unit can file for an injunction blocking the collection of taxes if the unit failed to comply with Section 26.05 or 26.04.² The taxing unit can defend itself by showing the failure was made in good faith, but the burden is on the unit to prove it.

The timing is tight. The property owner must file the injunction action within 15 days after the taxing unit adopts its rate. While the action is pending, the owner is not required to pay the taxes imposed by that taxing unit. If the owner does pay and later wins the injunction, the taxing unit has to refund the taxes along with reasonable attorney’s fees and court costs, without requiring the owner to apply to the tax collector for the refund.² Fee recovery is rare in Texas property tax law, and that is what turns Section 26.05(e) into a working enforcement tool rather than a paper right.

1
State of Texas. Texas Tax Code Section 26.05 – Tax Rate
2
State of Texas. Texas Tax Code TAX 26.05 – Tax Rate
3
State of Texas. Texas Tax Code Section 26.06 – Notice, Hearing, and Vote on Tax Increase
4
Texas Comptroller of Public Accounts. Hearings Requirements
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State of Texas. Texas Tax Code Section 26.07 – Automatic Election to Approve Tax Rate of Taxing Unit Other Than School District
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Texas Comptroller of Public Accounts. Tax Rate Calculation