What increases the rollback tax amount annually after appraisal?

The rollback tax amount is a provision designed to hold property owners accountable for tax increases when a property’s use changes from agricultural or open-space use to a different use, typically when there’s a development or change in property classification.

In Texas, when a property is removed from its preferred agricultural use, a rollback tax is imposed based on the difference between the current market value and the previous agricultural value for a specified period (usually the past five years). The amount of this tax is capped at a percentage increase for each year following the change.

The correct answer indicates that the rollback tax amount increases by 7 percent annually after appraisal. This figure is vital for property owners to understand, as it affects their financial liability if they decide to change the use of their property. It ensures property owners cannot significantly underpay taxes based on a lower appraisal value when there's a shift in property use, thus aligning taxation with the property’s market value more closely over time.