Relating to a restriction on the authority to disburse money paid into the tax increment fund for a tax increment financing reinvestment zone to pay certain project costs for the zone.

SB 2261 restricts how local governments can use funds from tax increment financing (TIF) reinvestment zones. It limits annual disbursements from the tax increment fund for specific project costs (defined in Tax Code Sections 311.002(1)(D) and (E)) to no more than 25% of total deposits made into the fund during that year. This directly affects cities and counties operating TIF zones by capping annual spending on qualifying projects like infrastructure or redevelopment. The law takes effect January 1, 2026, and modifies existing Tax Code Section 311.014 without changing the purpose of TIF zones.