Texas Homeowners Could Save Thousands Under New Tax Relief Bill

Texas lawmakers recently passed a landmark Texas property tax relief bill that could put thousands of dollars back into homeowners’ pockets.

But the ambitious $18 billion bill comes with a significant catch – it hinges on voters approving a constitutional amendment in November 2023.

The Push for Texas Property Tax Reform

Texas Governor Greg Abbott made property tax cuts a top priority for 2022. With home values rapidly rising throughout Texas, Governor Abbott forced special legislative sessions in June and July to address the issue.

Lawmakers finally struck a mutually acceptable property tax cut deal in July after failing to agree during the regular session. The bill ultimately passed the Texas Legislature in the Texas House and Senate.

What Does the Texas Tax Relief Bill Do?

If approved by voters, the Texas property tax cuts would provide savings to property owners through several avenues:

Increased Texas Homestead Exemptions: The homestead exemption for school district property taxes would increase from $40,000 to $100,000, exempting more of a home’s value from property taxes.
Cutting School District Tax Rates: The bill requires at least a 10.7% reduction in the school property tax rate levied by school districts across Texas. The state would provide school districts $12 billion to offset lost revenue from lower property taxes.
Capping Valuation Growth: For non-homestead properties under $5 million, annual increases in appraised value would be capped at 20% from 2024-2027. This benefits owners of commercial properties, rental properties, and vacant land.
Franchise Tax Relief for Small Business: The small business franchise tax exemption would increase from $1.23 million to $2.47 million in annual revenue.

Why the November 2023 Texas Property Tax Relief Vote Matters

The tax cuts can only proceed with a constitutional amendment approved by voters in November 2023. The bill requires provisional 2023-2024 property tax bills to account for the uncertainty.

If voters reject the amendment, homeowners would owe supplemental taxes.

How Much Could Texas Homeowners Save?

For a home valued around $300,000, total Texas property tax legislation savings could lower the tax burden by $2,500 per year once the homestead exemption increase and school district tax rate cuts take full effect.

But the savings will only materialize if Texas voters approve the constitutional amendment enabling the tax relief.

Most Texas homeowners could see substantial drops in their property tax bills if the November 2023 ballot measure passes. The outcome will determine the fate of one of the most ambitious property tax relief bills in Texas history.