The Texas tax rollback rate is the maximum property tax rate a local taxing unit can adopt before voters must approve the increase at an election. Texas law renamed it the “voter-approval tax rate” in 2019, but both terms describe the same ceiling. For most cities, counties, and general-purpose districts, that ceiling allows maintenance and operations revenue to grow 3.5 percent above the prior year’s no-new-revenue level, then adds the current debt rate and any banked unused increment on top.1State of Texas. Texas Tax Code Chapter 26 – Assessment
The Two Rates That Feed the Calculation
Every rollback calculation starts from the no-new-revenue tax rate. That rate is whatever number, applied to properties taxed in both years, would produce the same total revenue as the prior year.2Texas Comptroller of Public Accounts. Tax Rate Calculation When appraised values rise, the no-new-revenue rate falls; when values drop, it rises. It’s the revenue-neutral baseline.
That baseline splits into two components, and the rollback formula treats them differently.
The maintenance and operations (M&O) rate funds day-to-day government: salaries, public safety, road maintenance, supplies, administrative overhead. This is the piece the growth cap applies to.
The debt service rate, sometimes called the interest and sinking rate, covers principal and interest on bonds voters have already approved. Because those payments are fixed legal obligations, this component passes into the rollback calculation without any growth adjustment. A taxing unit can’t skip a bond payment because operational growth is capped.
How the Rollback Rate Is Calculated
The formula differs based on the type of taxing unit. A “special taxing unit” is a hospital district, a junior college district, or any unit whose proposed M&O rate is 2.5 cents or less per $100 of taxable value. Everyone else uses the standard formula.1State of Texas. Texas Tax Code Chapter 26 – Assessment
Standard Taxing Units
Voter-Approval Rate = (No-New-Revenue M&O Rate × 1.035) + Current Debt Rate + Unused Increment Rate
The 1.035 multiplier lets operational revenue grow by 3.5 percent above the no-new-revenue level. Add the current debt rate for this year’s required bond payments. Add any unused increment (explained below). The sum is the highest rate the unit can adopt without holding a voter-approval election.1State of Texas. Texas Tax Code Chapter 26 – Assessment
Special Taxing Units
Voter-Approval Rate = (No-New-Revenue M&O Rate × 1.08) + Current Debt Rate
Special taxing units use an 8 percent growth multiplier instead of 3.5 percent and do not add an unused increment component. The wider margin is treated as sufficient flexibility on its own.1State of Texas. Texas Tax Code Chapter 26 – Assessment
A Worked Example
Say a county has a no-new-revenue M&O rate of $0.4200 per $100 of taxable value, a current debt rate of $0.0500, and an unused increment rate of $0.0050. Run the numbers:
($0.4200 × 1.035) + $0.0500 + $0.0050 = $0.4347 + $0.0500 + $0.0050 = $0.4897
If the county proposes adopting $0.5000, that rate exceeds $0.4897 and an election is required. Fractions of a cent per $100 matter, because that’s the resolution at which the ceiling is enforced.
The Unused Increment Rate
Non-special taxing units that adopt a rate below their voter-approval ceiling in a given year can bank the difference. That “foregone revenue” carries forward for up to three years and gets added into future rollback calculations as the unused increment rate.3State of Texas. Texas Tax Code Section 26.013 – Unused Increment Rate
The calculation looks back at the three tax years immediately preceding the current year. For each of those years, take the voter-approval rate (minus any unused increment already applied that year), subtract the actual adopted rate, and multiply by that year’s total taxable value. If the adopted rate met or exceeded the adjusted voter-approval rate, the foregone amount for that year is zero. Add the three years together and divide by the current year’s total taxable value.3State of Texas. Texas Tax Code Section 26.013 – Unused Increment Rate
The result can’t fall below zero. Foregone revenue is also zeroed out for any year in which the unit calculated its rate under the disaster provisions of Section 26.042 or was designated a “defunding municipality” under state law.2Texas Comptroller of Public Accounts. Tax Rate Calculation
The De Minimis Rate for Smaller Units
Smaller taxing units have a second threshold. The de minimis rate equals the no-new-revenue M&O rate, plus the rate needed to raise $500,000 in tax revenue, plus the current debt rate. For a unit with a small tax base, $500,000 in additional revenue can translate to a per-$100 rate that exceeds the 3.5 percent voter-approval ceiling.
The election trigger uses whichever number is higher, the voter-approval rate or the de minimis rate. A small county whose de minimis rate lands above its voter-approval rate can adopt up to the de minimis level without an automatic election. If the adopted rate sits between the voter-approval rate calculated as if the unit were a special taxing unit (the 8 percent version) and the de minimis rate, a petition signed by 3 percent of the unit’s qualified voters can still force an election.4Texas Comptroller of Public Accounts. Elections to Approve Tax Rate
Disaster-Area Adjustment
When the governor or president declares a disaster in a taxing unit’s area, the ceiling can rise to cover recovery costs. Under H.B. 30, effective January 1, 2026, a city in a declared disaster area calculates its voter-approval rate as the lesser of two figures: the rate produced by the 8 percent special-taxing-unit formula, or its standard voter-approval rate plus a “disaster relief rate.”
The disaster relief rate is whatever rate would raise revenue equal to the city’s estimated share of disaster costs. Eligible costs include debris removal, emergency sheltering, overtime and hazard pay for police, fire, and EMS personnel, water treatment, essential supply distribution, search and rescue, evacuation, medical transport, and security. A city that adopts above the lesser of these two options still has to hold a voter-approval election.1State of Texas. Texas Tax Code Chapter 26 – Assessment
What Happens If a Taxing Unit Exceeds the Rate
Going above the rollback rate triggers one of three election paths, depending on the unit.
- Most taxing units face an automatic election on the November uniform election date. This includes all special taxing units, cities with a population of 30,000 or more, and any unit that exceeds both its voter-approval rate and its de minimis rate.4Texas Comptroller of Public Accounts. Elections to Approve Tax Rate
- In the narrow case where a non-special taxing unit adopts above its voter-approval rate but at or below the de minimis rate, an election happens only if qualified voters submit a valid petition.4Texas Comptroller of Public Accounts. Elections to Approve Tax Rate
- School districts follow a separate track called a tax ratification election. Any district that adopts above its voter-approval rate must hold one automatically, with no de minimis alternative and no petition route.4Texas Comptroller of Public Accounts. Elections to Approve Tax Rate
If a majority of voters approve the proposed rate, the taxing unit keeps it for the current year. If a majority votes it down, the rate drops to the voter-approval level, and the governing body has to rework its budget around the reduced revenue. Bond payments still have to be made, so cuts fall on the operational side.4Texas Comptroller of Public Accounts. Elections to Approve Tax Rate