TAX INFORMATION
UNDERSTANDING THE TAX RATE
A school district's total tax rate is made up of two parts, which divide the school district budget into two “buckets” - the maintenance and operations (M&O) rate and the interest and sinking (I&S) rate. Each has a designated purpose and budget.
M&O Tax Rate vs. I&S Tax Rate:
The M&O budget is used for daily operations of the district, including utilities, salaries, supplies, repairs, and fuel.
The I&S budget is used to repay debt for capital improvements through voter-approved bonds. These improvements include new construction, renovations, HVAC and roofing replacements, land purchase, furniture, and technology.
Bond elections only affect the I&S tax rate. Funds from a bond CANNOT be used as part of the M&O budget or to increase salaries.
DID YOU KNOW?
On July 22, 2023, Governor Abbot signed into law a sweeping property tax relief bill, known as Senate Bill 2. This bill allocated over $18 billion of the State’s budget surplus to providing property tax relief to Texas residents in a variety of ways. Two key provisions of this bill will significantly reduce the property taxes paid by residents of Lexington ISD to the District. The first provision, tax rate compression, has reduced Lexington ISD’s maintenance and operations tax rate by $0.1854, from $0.9429 to $0.7575. The second provision, an increase to the homestead exemption, increases eligible homeowners homestead exemption by $60,000, from $40,000 to $100,000. Residents of Lexington ISD with an eligible homestead exemption will now reduce their home’s appraised market value by $100,000 before applying taxes from the District. This increase to the homestead exemption will be on the ballot for approval by Texas voters in November 2023.
KEY TAKEAWAYS
Lexington ISD has reduced its tax rate by $0.1854 this year, passing along significant savings to its taxpayers.
Eligible homesteads will now reduce their appraised market values by $100,000 for taxes due to Lexington ISD. Subject to approval by Texas voters during the November 2023 election.
HOW DOES THE BOND IMPACT MY TAXES?
Lexington ISD’s proposed bond election will require an increase to the interest and sinking fund tax rate of $0.37, from $0.13 to $0.50. This increase is offset by the $0.1854 reduction to the maintenance and operations tax rate approved by Lexington ISD’s Board of Trustees. Put another way, the approval of the 2023 bond election will result in a net tax rate increase of $0.1846 from the 2022 rate of $1.0729.
2022 Lexington ISD Combined Tax Rate: $1.0729 (M&O Rate of $0.9429, I&S Rate of $0.1300)
2023 Lexington ISD Combined Tax Rate: $0.8875 (M&O Rate of $0.7575, I&S Rate of $0.1300)
2024 Lexington ISD Combined Tax Rate: $1.2575 (M&O Rate of $0.7575, I&S Rate of $0.5000)*
* The 2024 M&O rate of $0.7575 is subject to additional compression per Texas Education Agency guidelines.
Even with the passage of the 2023 bond election, the combination of the reduction in Lexington ISD’s tax rate for 2023, and the increase to the homestead exemption from $40,000 to $100,000, will result in a decrease to tax bills for Lexington ISD taxpayers when compared to 2022 tax rates. This decrease applies to taxpayers with homestead market values of $450,000 and below. An example of this decrease is displayed below:
0% TAX INCREASE FOR HOMEOWNERS 65+
Under state law, as long as a homestead and over 65 exemption application have been filed with the local appraisal district, the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older cannot be increased above the amount paid in the first year after the person turned 65 – regardless of changes in tax rate or property value – unless significant improvements are made to the home, increasing the overall value. For more information, click here.