In Texas, local entities set the rate for property taxes each fiscal year. If they raise the tax rate up past a level known as the rollback rate, taxpayers in the area can petition for an election to lower it back down. For this reason, many taxing entities avoid raising taxes too much in one year. To calculate the rollback rate, you must know the current tax rate because the next year's rollback rate completely depends on the what the rate was the year before. School districts have a different set of rules from all other taxing entities.
Calculate the Rollback Rate for Most Taxing Entities
Look at last year's budget. Every year, the tax rate is split between how much property taxes were used to pay for day-to-day operations and how much was used for debt service. The debt service rate is not important for the rollback rate calculations. The portion that is important, which funds daily operations, is called the maintenance and operations rate. It reflects how much taxes are paid per $100 worth of property.
Multiply last year's maintenance and operations rate by 1.08. This figure will be an 8 percent increase.
Add the proposed debt service tax rate to the calculation. This is the rollback rate.
Calculate the Rollback Rate for School Districts
Look at last year's budget. Every year, the tax rate is split between how much property taxes were used to pay for day-to-day operations and how much was used for debt service. The debt service rate is not important for the rollback rate calculations. The portion that is important, which funds daily operations, is called the maintenance and operations rate. It reflects how much taxes are paid per $100 worth of property.
Multiply this rate by $100.
Add 8 cents. Add the debt service tax rate to this total. This is the rollback tax rate.
