Property Tax Relief for Homeowners in Texas

Homeowners could see significant reductions in their property tax bills thanks to recent legislation passed during this year’s session.

Governor Greg Abbott signed two key proposals at Robson Ranch in Denton County on Monday, aimed at enhancing tax exemptions for Homestead properties.

For several years, state lawmakers have been focused on easing property taxes for homeowners, which largely fund local school districts, cities, and counties.

Here’s a breakdown of the property tax relief measures expected to take effect this year.

Expanded Homestead Exemptions

The most impactful change is Senate Bill 4, which increases Homestead exemptions from $100,000 to $140,000.

Essentially, this means homeowners can deduct $140,000 from their property’s taxable value when it comes to school district taxes. This could alleviate a substantial burden, particularly since school property taxes often make up a large portion of overall tax bills.

Senator Paul Bettencourt, the bill’s author, estimates that this change will save Houston-area homeowners about $5.7 million annually through increased exemptions.

Previously, lawmakers had raised the Homestead exemption from $40,000 to $100,000 in 2023.

Bigger Tax Cuts for Seniors and Disabled Residents

Another proposal from Bettencourt aims to escalate the Homestead exemption for seniors and individuals with disabilities aged 65 and older to $200,000.

Similar to other measures, Senate Bill 23 targets solely school district tax rates, excluding counties and cities among other entities.

This increase means that many elderly residents could see their public school tax obligations significantly reduced, with Bettencourt noting that a large number may end up paying no school taxes at all.

Voter Approval Required for the Tax Cuts

However, these increased exemptions are not yet a done deal.

Texas voters need to approve the amendments in a ballot during November for them to be enacted, as they will be proposed as changes to the Texas Constitution.

Tax cuts like these often enjoy broad bipartisan support; during this session, no lawmakers opposed the proposed amendments.

In 2023, previous amendments also received significant voter backing, passing with an 83% approval rate.

Impact on Renters

Unfortunately, renters are not expected to benefit from these property tax relief measures. This has raised some concerns that school districts might grow more reliant on property tax revenues as homeowners’ tax burdens lessen.

Renters typically do not pay property taxes directly, but landlords often pass those costs onto tenants. In Dallas County, for instance, around 49% of residents are renters.

Future of Property Tax Relief

While some Republican leaders advocate for the complete elimination of property taxes, achieving that goal without offsetting those losses elsewhere remains uncertain. Increasing sales tax has been suggested as a potential solution.

Currently, the imposition of state income taxes is prohibited.

Abbott has emphasized that promoting property tax reductions will be a priority for the legislative session in 2027. Although his full plan isn’t finalized, he suggests that making it harder for cities and school districts to raise property taxes beyond state limits is key.

He has also proposed requiring two-thirds voter approval for any property tax increases, a higher threshold than the simple majority currently needed.

“A taxable entity cannot raise your property tax without two-thirds approval from voters,” he stated. “No approval, no new taxes.”

However, proposals aligned with Abbott’s vision during this year’s legislative session were not successful.