Texas Voters Face a Tax Choice: Property Tax Cuts or $1,500 Refunds?
Candidates in the Texas governor race have different ideas about how to put money back in Texans' pockets.
Affordability has emerged as a defining issue in many states this election cycle, and Texas, where Gov. Greg Abbott is seeking a fourth term, is no exception.
Abbott has placed property-tax relief at the center of his campaign agenda, while his Democratic challenger, state Rep. Gina Hinojosa, is offering a different approach: a one-time $1,500 payment to every Texas household, funded with $17 billion from the state's "Rainy Day Fund."
Although Texas is a no-income-tax state, the proposals come as Texans contend with higher costs across major household expenses. Over the past decade, energy prices in Texas have reportedly gone up 65%, housing costs 44%, and food prices 41%, according to an analysis by The Texas Tribune.
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Abbott and Hinojosa have responded with competing proposals to put money back in Texans' pockets.
Their plans, however, take different approaches: Abbott wants to reduce an ongoing tax burden for homeowners, while Hinojosa wants to make a one-time payment to Texas households. Here's more to know.
Texas Gov. Abbott property tax plan
Gov. Abbott has proposed eliminating school property taxes for homeowners and placing additional limits on property-tax growth.
His five-point property-tax plan calls for limits on local government spending, two-thirds voter approval for property-tax increases, and greater authority for voters to roll back taxes.
He also wants changes to property-appraisal rules and a lower annual cap on homestead appraisal growth from 10% to 3%. His plan would also extend appraisal limits to additional property types.
Abbott's campaign says its broader affordability agenda could reduce property taxes by up to 50% and save the average homeowner roughly $3,000 a year.
(Those figures are campaign estimates. The amount an individual homeowner would save would depend on the property and the legislation ultimately enacted.)
The proposal follows property-tax changes enacted during Abbott's current term.
- Last year, as Kiplinger reported, Texas increased the general homestead exemption to $140,000, with a $200,000 exemption for seniors and disabled homeowners. (Those changes took effect for tax assessments impacting the 2025–2026 tax cycles.)
- State officials also said the 2025 changes would significantly reduce school property taxes for homeowners.
It's worth noting that eliminating school property taxes would affect how Texas finances public education since school districts currently receive substantial revenue from property taxes.
- The Tax Policy Center recently reported that Texas school districts collected about $42 billion in property taxes in 2024, with roughly 45% to 50% coming from homesteads.
- The center estimated that eliminating school property taxes on homesteads could create an annual revenue gap approaching $20 billion, depending on how the policy is structured.
That estimate is one reason the proposal is about more than the property-tax bills homeowners pay. Such a measure would also raise important questions about how the Lone Star State would replace the revenue.
Hinojosa $1,500 cash rebate proposal
Rep. Hinojosa, who represents Austin in the Texas House, has proposed sending $1,500 to every Texas household, at an estimated total cost of $17 billion.
Her proposal would use money from the state's Economic Stabilization Fund, known as the Rainy Day Fund. Hinojosa's campaign calls the payment a "corruption tax refund." But the proposal would be a one-time distribution from state reserves, not a refund of a particular previously paid tax.
When Hinojosa announced the proposal earlier this summer, her campaign said the Rainy Day Fund stood at nearly $25 billion and that the $17 billion distribution would leave roughly $10 billion.
- The Comptroller's current 2026-27 revenue estimate projects a $27.43 billion Rainy Day Fund balance for fiscal 2026 and $28.48 billion for fiscal 2027.
- Those figures are projections and assume no additional legislative appropriations from the fund.
Hinojosa's campaign notes on its Money in Your Pocket website that Texas has accumulated enough money in the fund to return some to residents, citing experts who say the Rainy Day Fund needs only about a $10 billion balance to remain fiscally responsible.
However, policy analysts at Rice University's Baker Institute for Public Policy note that pulling $17 billion from the Rainy Day Fund would require a legislative supermajority to clear statutory floor limits, and warn that injecting cash into consumers' hands could temporarily heighten local inflation.
More on affordability in the Texas governor platforms
Both Abbott's and Hinojosa's affordability agendas go beyond taxes.
For example:
- Gov. Abbott has proposed allowing developers to use home designs approved by at least three Texas cities without needing further approvals and enabling homeowners to build property additions.
- He has also suggested a $400 million roof fortification grant program, similar to an Alabama initiative, which his campaign has said could help lower homeowners' insurance costs.
Abbott wants to allow small businesses to offer health plans exempt from certain state insurance mandates, potentially expanding coverage for some uninsured Texans. He also proposes to cap monthly copayments for inhalers and epinephrine at $25 for state-regulated health plans.
Additionally, Abbott's "Keep Texas Affordable" initiative includes expanding competition in the electricity market by allowing consumers in Austin and San Antonio to choose retail electricity providers, which he claims could lower costs.
However, officials from Austin Energy and CPS Energy have reportedly expressed concerns that deregulating city-owned utilities might reduce municipal revenue and not ensure lower rates.
Meanwhile...Rep. Hinojosa has also called for a freeze on residential electricity rates until the state requires data centers and other high-load electricity users to pay for necessary infrastructure.
- Hinojosa proposes eliminating over $1 billion in state tax exemptions granted to data centers. She argues that tech giants should bear the full cost of their grid demands.
- In response to growing pressure over grid demands, Gov. Abbott recently directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas (ERCOT) to review data center grid connections to ensure companies contribute to the power infrastructure.
Hinojosa also wants to restrict private-equity purchases of single-family homes. During the 2025 session, she introduced state legislation that would have prevented institutional investors from buying more than 10 single-family homes during a housing shortage.
On the high cost of groceries, Hinojosa has proposed banning so-called predatory surveillance pricing. The measure would prohibit retailers from using consumer data and algorithms to charge different prices based on what they know about customers.
Regarding healthcare, Hinojosa's campaign notes on its website that "Texas has the highest uninsured rate and the highest number of uninsured children in the country."
As a result, Hinojosa has proposed banning what she describes as bad-faith insurance denials and strengthening the state's rural hospital system.
Texas governor race: Bottom line
It's important to note that neither the property tax nor the cash rebate proposal is currently law, and Texans won't vote directly on Abbott's property-tax changes or Hinojosa's $1,500 payments on the November ballot.
So, the election results alone won't determine whether either tax measure eventually becomes a reality.
Instead, Texas voters will choose which candidate gets to champion these and other measures from the Governor's mansion for at least four years. Stay tuned.
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