Homeowners likely will see hundreds of dollars shaved off their property taxes in a slate of bills passed during this year’s legislative session.
Gov. Greg Abbott signed two proposals into law Monday at Robson Ranch in Denton County that will increase homestead tax exemptions.
State legislators worked over several years to lessen the impact of property taxes mainly for homeowners. Those taxes fund large portions of school districts’, cities’ and counties’ budgets.
Here’s what to know about property tax relief proposals that could go into effect this year.
Bigger homestead exemptions
The most impactful property tax relief passed was Senate Bill 4. It increases the homestead exemption from $100,000 to $140,000.
How it works is homeowners can shave $140,000 off the taxable value of their home when paying school district property taxes. In theory, a home worth $140,000 would no longer be required to pay school property taxes, which often make up the largest portion of a homeowner’s tax bill.
The author of SB 4, Sen. Paul Bettencourt, R-Houston, estimated that increasing the homestead exemption will save 5.7 million homeowners $484 a year.
Lawmakers previously increased the homestead exemption in 2023 from $40,000 to $100,000.
Texas seniors and the disabled to see even bigger tax cuts
Another Bettencourt proposal increases the homestead exemption for homeowners over 65 and those with disabilities to a total of $200,000.
Like the other proposal, Senate Bill 23 only applies to school district tax rates and not other taxing entities, such as counties, cities, community colleges and hospital districts.
However, the increased exemption for seniors and those with disabilities will eliminate public school taxes for what Bettencourt described in a news release as a “super majority of seniors paying zero ISD taxes.”
Texas voters must approve these property tax cuts
The increases to homestead exemptions are not a done deal yet.
Voters must approve them in November before they can take effect. The proposals will be on the ballot as proposed amendments to the Texas Constitution.
However, such tax cuts typically have wide bipartisan support. No lawmaker voted against either of the two proposed constitutional amendments during this year’s session.
In 2023, Texas voters approved the previous amendment to increase homestead exemptions by a wide margin, with 83% for and 17% against.
Will renters see any property tax relief?
No. The lack of relief for renters has been one of the criticisms of increases to property tax exemptions, under the belief that as homeowners’ tax burden decreases, school districts come to rely more on rental and businesses for property tax revenue.
While renters don’t pay property taxes directly, owners of rental properties tend to pass their tax costs on to their tenants. In Dallas County, about 49% of residents rent their homes, according to census data.
What’s next for property tax relief?
Some in Republican leadership wish to abolish property taxes altogether. However, it is unclear how that would be accomplished without raising taxes elsewhere. Sales tax would likely be the most ripe target to make up the difference.
Lawmakers prohibited the state from ever levying a state income tax, which voters enshrined into the Texas Constitution in 2019.
Abbott has said that furthering property tax cuts will be a priority when the Legislature meets in 2027. Abbott’s full policy has yet to take shape, but he said that he wants to make it harder for cities and school districts to raise property rates above state-sanctioned caps.
Abbott has said he favors requiring cities and counties to get voter approval for nearly any tax rate increases. During his State of the State address this year, he proposed raising the threshold for voter approval from a simple majority to a two-thirds supermajority.
“No taxing entity should be able to raise your property taxes without a two-thirds approval by voters,” he said. “No approval, no new taxes.”
Legislative proposals to put in place Abbott’s suggestion failed during this year’s legislative session.