To the Administrator Addressed (TAA) Correspondence
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This letter details matters regarding tax rates for the tax year (TY) 2026 and the related state funding implications for the 2026-2027 school year (SY) based on Texas Education Code (TEC), 搂搂48.255, 48.2551, and 48.2552, and 19 Texas Administrative Code (TAC) 搂61.1000. It is important to remember that Tier One tax compression does not impact the overall level of funding to which a district is entitled. Rather, tax compression only impacts the balance of state and local share of a school district鈥檚 total Tier One entitlement. This notice does not apply to open-enrollment charter schools. Nothing stated in this correspondence supersedes the Texas Tax Code, Texas Education Code, or the Texas Administrative Code.
State and local compression work in parallel to determine a district鈥檚 maximum compressed tax rate (MCR) for Tier One. Districts receive the method that results in the greatest amount of compression (i.e., the lowest tax rate) for this portion of Maintenance and Operations (M&O) taxes.
To determine the MCR for a given tax year, state compression: (1) compares the extent to which estimated statewide property value growth (set by the General Appropriations Act at 3.60 percent for TY 2026) exceeds 2.5 percent; and (2) may further reduce the maximum state compression rate in accordance with TEC, 搂48.2552(c), after accounting for additional state revenue as determined under TEC, 搂48.2552(b). See calculations below.
TY 2026 State Compression Rate: 0.6322 脳 (1.025 梅 1.036) - 0.0000 = $0.6254
Similarly, local compression uses individual district property value growth compared to 2.5 percent to determine the MCR, using the prior-year MCR for each district as a starting point. Since districts receive the lesser of the MCR calculated under state compression or local compression, a district鈥檚 MCR may be lower than the state MCR of $0.6254, depending on the district鈥檚 prior-year MCR and rate of local property value growth compared to 3.60 percent.
In order to maintain tax rate equity, no district may have an MCR less than 90 percent of any other district. The limit on local compression for TY 2026 is $0.5628 ($0.6254* 0.90). This results in a range of possible TY 2026 MCRs of $0.5628 to $0.6254.
The 黑料社 (TEA) will open a data collection from July 18, 2026, through August 1, 2026. This data collection will focus on local school district property tax data for TY 2026 and historical local property values. The agency will use the locally estimated property value growth rates to calculate estimates of Comptroller-certified state property values used for state funding purposes (i.e., 鈥淭2鈥 property values) and will then determine and make available the maximum compressed Tier One tax rates in August 2026. More details about this data collection will be sent via email notifications to subscribers of Public School Funding Updates in July 2026. Sign up to for Public School Funding Updates.
Pursuant to Texas Tax Code, 搂26.08(n), the maximum rate districts can adopt without a Voter Approval Tax Rate Election is the district鈥檚 maximum Tier One compressed rate as discussed above, plus the greater of:
The basis for determining whether voter approval elections are required will begin with the district鈥檚 TY 2026 MCR plus the number of enrichment pennies authorized and set in TY 2025, less any pennies adopted under disaster provisions. See Texas Tax Code, 搂26.042(e), (f), and (g).
| Tier | Pennies | Action Required to Access |
|---|---|---|
| Tier Two Copper Pennies | 9 鈥 17 | Voter Approval Required (or previously authorized in prior tax year) |
| Tier Two Golden Pennies | 6 鈥 8 | Voter Approval Required (or previously authorized in prior tax year) |
| Tier Two Golden Pennies | 1 鈥 5 | No Voter Approval Required |
| Tier One | 0 - MCR | No Voter Approval Required |
Note. For purposes of Tier Two enrichment, each 鈥減enny鈥 represents $0.01 of M&O tax rate per $100 of taxable property value above the district鈥檚 MCR.
The maximum M&O tax rate for any district in TY 2026 will be $0.7954 ($0.6254 + $0.17)1. Districts with local compression that exceeds state compression will have a lower maximum M&O tax rate.
A Tax Rate and MCR Template is available under the District & Charter Planning Tools subheading on the State Funding webpage, which can help districts understand the inputs and calculations behind the TY 2026 MCRs. Districts will need to enter the TY 2026 locally certified values based on the $140,000 state homestead exemption to calculate accurate growth rates.
Districts are still required to complete the Local Property Value Survey (LPVS) to calculate their MCR. Once the MCR is approved by TEA in August 2026, districts may adopt their 2026 tax rates in accordance with Tax Code 搂26.08. A district鈥檚 MCR will not be adjusted after approval by the TEA unless an appeal is granted. Please note that the purpose of this template is limited to assistance only and does not anticipate any tax rate increase that the district may be considering. Legal responsibility to adopt a tax rate in accordance with the law remains with the district, which should consult with its own legal counsel.
If you have any questions related to maximum compressed tax rates as determined under TEC, 搂48.2551, please contact the Division of State Funding, Forecasting and Fiscal Analysis by phone at (512) 463-9238 or by email at taxprograms@tea.texas.gov.
1 Except for certain Harris County districts with special authorization.