Texas Property Tax Relief: Who Saves the Most?

A large housing development near the suburban community of Arcola Texas located about twenty miles south of downtown Houston

(Image credit: Getty Images)

Homeowners in the Lone Star State might have already noticed lower property tax bills this year, thanks to a Texas property tax relief package (Proposition 4) that became effective last year. The compromise between Texas lawmakers, which came after many months of disagreement, includes an increased homestead exemption and property tax cuts for businesses and homeowners. Texans approved the tax package last November.

In a statement released after lawmakers reached the deal, Texas Gov. Greg Abbott referred to the more than $18 billion in tax cuts as a "comprehensive, long-lasting solution to increasingly burdensome property tax bills."

But not every Texan has experienced the same amount of financial relief. How much you save depends on several factors. Here’s the breakdown of what’s included in the property tax cuts package.

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Texas property tax relief for homeowners

The property tax relief package includes tax cuts through compression (providing more funding to school districts so schools can cut taxes for homeowners), which was a priority for Gov. Abbott. Tax compression began five years ago, but Proposition 4 provides an additional savings of 10.7 cents per $100 valuation ($107 per $100,000 valuation).

An increased homestead exemption, which was a sticking point for Texas Lt. Gov. Dan Patrick, also made it into the final deal. The Texas homestead exemption has more than doubled, from $40,000 to $100,000.

This is helpful for some residents because it means an additional $60,000 of a property’s taxable value is exempt from property taxes.

The homestead exemption is $110,000 for Texas homeowners 65 and older.
Homeowners with disabilities are also be eligible for the $110,000 exemption, regardless of age.
Approximately 5.7 million Texas homeowners qualify for the homestead exemption.

Circuit breaker tax credit

Homeowners and businesses may be eligible to claim a circuit breaker tax credit. That tax credit essentially limits how much property taxes can increase in a certain period in Texas.

The credit is also be available to non-homestead properties (properties that are not the owner’s primary residence) and will cap yearly appraisal increases at 20%. The program could provide tax relief for small businesses, which was a priority for Gov. Abbott.

Properties valued at $5 million or more do not qualify for the credit. However, that number can change in future years, based on inflation rates.
The circuit breaker credit is available through the end of 2026, when lawmakers would consider whether the program should be extended.
Homesteaded properties are still subject to the 10% maximum increase under current law.

Unlike circuit breaker programs in most other states, the new Texas credit is not based on income or age.

Texas franchise tax

Texas previously exempted businesses making less than $1.24 million from paying the state’s franchise tax. But one of the bills included in the property tax relief package nearly doubles the exemption to $2.47 million.

The legislation eliminates Texas franchise taxes for roughly 40% of small and medium-sized businesses, according to state Sen. Paul Bettencourt (D-7), one of the Texas legislators who filed the bill.

Texas property taxes in 2024

Texas homeowners saw impacts of the property tax relief package in January 2024, when they received their 2023 property tax bills.

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.