Homeowners in the Lone Star State might remember receiving serious property tax breaks just two years ago.
But thanks to three Texas property tax bills passed this fall, more relief is on the way.
Among the Texas property tax relief measures are two increased homestead exemptions as well as a property tax cut for businesses. Homeowners and business owners may expect to receive $10 billion in tax relief funds.
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“Never before has the Texas Legislature allocated more funds to provide property tax relief than they did this session,” said Texas Gov. Greg Abbott in a press release before the package was approved by voters on the November ballot.
However, not every Texan is on board with the financial relief, which will dip into budget surpluses despite future uncertainty surrounding federal funding. Plus, localities could foot the bill for the tax cuts.
Here’s a breakdown of the property tax relief in Texas and how much you can expect to save.
Texas property tax relief passed for homeowners
Part of the many provisions approved by Texas voters on the November ballot was raising the homestead exemption for Texan homeowners.
- This is a big deal because two years ago, the exemption amount more than doubled, from $40,000 to $100,000.
- The new Texas homestead exemption increases that amount to $140,000.
- As a result, 5.7 million homesteads in Texas may see a lower property tax bill this year.
Texas Lt. Gov. Dan Patrick, a major advocate of property tax relief, stated that homeowners under age 65 could see their school taxes cut by “almost 50%.” Raising the exemption amount to $40,000 of a property’s taxable value makes that amount exempt from property taxes.
But that’s not all — homeowners age 65 and older or those with disabilities will save even more on property taxes in Texas.
The Texas older adult homestead exemption
Not only will the state pick up the tab for homeowners under age 65, but those 65 and older also gain more Texas property tax relief:
- The former homestead exemption for those age 65 and older or with disabilities was $110,000.
- That was an increase from $50,000 two years ago.
- With the new package, the exemption jumps to $160,000, or a total of $200,000 combined with the standard homestead exemption.
- At least two million Texan households are expected to see reduced property tax bills from this provision.
On average, the Texas Senate estimates that older or disabled homeowners will see annual savings of $454.30.
Combined with the first homestead exemption and school tax rate “compression” (more on that below), homeowners age 65 and older could receive $938.72 in property tax savings every year.
Texas business tax exemption
State businesses will also see a huge tax break under the new property tax relief approved in November.
Formerly, Texas law allowed businesses to exempt up to $2,500 of income-producing property from tax. This includes equipment such as computers, printers, or specialized vehicles.
The new law boosts the exemption to $125,000, dramatically reducing the amount of property taxes paid by businesses on personal business property.
The initiative is expected to save business owners an average of $2,499 per year, according to a post on X by Sen. Paul Bettencourt (R-Houston), author and proponent of Texas property tax relief.
Texas tax cuts: Localities could bear the brunt
All tax relief bills come with a cost. The Texas property tax cuts approved by voters will use “compression” to make up for lost revenue.
This means the state will provide more funding to school districts so schools can cut taxes for homeowners. But missed revenue at the county or municipal level will be the responsibility of local governments.
“If we have to raise [the rate] to recoup some of this lost money, it’s going to make us look like the bad guys,” McLennan County Commissioner Jim Smith told a local news outlet. He was specifically referring to the business tax exemption, which may force localities to raise rates to break even.
Others have raised concerns about increasing state-level spending amid federal budget uncertainties.
As the GOP’s so-called “Big, Beautiful Bill” has been signed into law, the Federal Reserve Bank of Dallas is reporting a softened, uncertain economy in Texas. Tariff policies coupled with federal spending cuts could complicate future budget planning in the Lone Star State. Stay tuned.
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