Explainers

There has been repeated public messaging from Leon County leadership suggesting that tax abatements are required to avoid exceeding the annual 3.5% property tax revenue cap. That claim leaves out a critical piece of Texas tax law: New-Property Revenue, commonly referred to as NNR. This page explains how county taxes actually work, what NNR is, and why tax abatements are a policy choice, not a requirement. The 3.5% Cap — What It Really Applies To Under Texas law, counties are generally limited to increasing existing-property tax revenue by no more than 3.5% per year without triggering a voter-approval election. ...

Yes — a PILOT can exist without a tax abatement — but it’s important to understand what that really means, because it works very differently than most people assume. This explainer focuses on how PILOTs work in Texas, especially at the county level. What is a PILOT? A PILOT is a Payment In Lieu Of Taxes. It is not a tax. It is a voluntary payment a company agrees to make by contract. ...

I’ve had a lot of conversations lately about school funding, and one term that keeps coming up is “golden pennies.” It’s confusing, so here’s a plain-English explanation using real numbers. Note: The example below is intentionally simplified and assumes no exemptions, homestead caps, or special adjustments, just to make the concept easier to follow. 🪙 First: what is a “penny”? In Texas, school tax rates are measured in pennies. Literally pennies. ...

A lot of folks have asked what it means that Leon ISD is a “Chapter 41” school district. Here’s a simple explanation. 🟩 What is a Chapter 41 school district? A “Chapter 41” (also called “recapture”) district is a Texas school district that the state considers property-wealthy under state law. That means: The district has more taxable property value per student than the state funding formulas allow. Because of that, the district must send a portion of its local school tax revenue back to the state to help fund other school districts. This system is often referred to as “Robin Hood.” ...

A Reinvestment Zone is a defined geographic area created by a local government to make a property eligible for certain economic incentives, most commonly tax abatements under Texas law. A reinvestment zone does not reduce taxes by itself, but it is a required first step before a county can even consider a tax abatement. What a reinvestment zone does (in simple terms) Think of a reinvestment zone as turning a switch from “not eligible” to “eligible.” ...

A tax abatement is an agreement where a local government (like a county) temporarily reduces or waives some portion of property taxes on a new project to encourage development. Think of it like this: the county is offering a discount on taxes in exchange for promises the company makes (investment, jobs, infrastructure, community benefits, etc.). What a tax abatement is (simple definition) A tax abatement typically reduces the taxable value of certain improvements (often new construction and equipment) for a set period of time. ...

In Texas, when someone says a school district is a “Chapter 41” district, they’re talking about recapture — sometimes called the “Robin Hood” system. In plain terms: if a district’s local property tax collections are high enough under the state formulas, the district can be required to send a portion of that money back through the state school finance system. That money is then used to support funding across the broader system. ...

Now that we’ve talked about what a Chapter 41 (recapture) school district is, I want to explain something most people don’t realize: 👉 For Chapter 41 districts like Leon ISD, passing a school bond is one of the only ways to keep more local tax money here at home instead of sending it back through the state system. If you haven’t read the Chapter 41 explainer yet, start here: What Is a Texas Chapter 41 School District? This sounds backwards, so here’s the simple version. ...