Texas Tax Breaks on the Horizon
Homeowners and businesses in Texas are set to benefit from larger tax breaks, as voters appear to favor a constitutional amendment aimed at enhancing the state’s homeownership tax credit.
As early as Tuesday night, it looks like people will approve a measure that raises the tax exemption on a home’s value for public school funding from $100,000 to $140,000. This change could lead to significant reductions—hundreds of dollars—for the average homeowner’s property tax bill. Additionally, it seems that those aged 65 and older, along with individuals with disabilities, may anticipate even more substantial savings due to another recent amendment.
Furthermore, businesses might also see relief from property taxes. An amendment in the works would exempt up to $125,000 from taxes on business inventory by local taxing authorities, which also looks likely to pass.
State Senator Paul Bettencourt, a Republican from Houston who championed this tax relief initiative, noted, “We absolutely recognize the need to provide property tax relief for homeowners and business owners, but specifically the public has bought into the idea that increasing the deduction for homeowners is a way to keep people in their homes and lower property taxes.”
According to the proposed Homestead Exemption Amendment, a typical Texas home valued at around $302,000 last year would save about $490 in school property taxes—this estimate comes from Tribune calculations. Homeowners who are older or live with disabilities would likely enjoy even greater savings.
Meanwhile, state lawmakers have invested millions in attempts to reduce property taxes, which rank among the highest nationwide. Over the next two years, Texas is expected to allocate $51 billion towards property tax reductions, including the raised homestead exemption. Though, some state budget analysts and skeptics of these tax cuts have cautioned that this high expenditure could leave Texas unprepared should the economy take a downturn.
These tax cuts are embedded in the state constitution, meaning if funding runs low, lawmakers might have to trim other parts of the budget, including additional tax cuts that aren’t constitutionally guaranteed.
In the meantime, the state is covering increased inventory tax exemptions for school districts. However, municipalities and counties that levy taxes on business inventory may need to implement higher tax rates or make cuts to their budgets to compensate for lost revenue.
