Texas Senate committee advances property tax cut
The Senate Committee on Local Government on Tuesday unanimously approved measures that would further increase the homestead exemption, the amount of property value a homeowner can write off before assessment.
Houston Senator and committee chair Paul Bettencourt, who authored SJR 2, and its enabling legislation SB 4, told members the measures will offer real savings to Texas homeowners at a time when everything seems to be more expensive.
“When you’ve got inflation baked in everywhere, the one place it’s not baked into is Texas’ ISD property tax bill,” said Bettencourt. “That’s a big, big advantage for homeowners. With the passage of this bill, additional help is on the way.”
The homestead exemption stood at $15,000 in 2015. Since then, the legislature has approved bills to raise it first to $25,000, then $40,000, and finally up to $100,000 last session. The measures passed onto the full Senate Tuesday would raise the exemption up to $140,000.
Bettencourt’s office projects the bill – added to additional compression of school property tax rates in the Senate version of the state budget– will save the average homeowner nearly $500 on their annual property tax bill, bringing the total amount of tax relief passed by the legislature since 2019 to $51 billion, he said. Bettencourt in the past has said that the homestead exemption is one of the most efficient ways to deliver tax relief to homeowners, a point reiterated by committee vice-chair and Galveston Senator Mayes Middleton.
“It’s the most direct way,” he said. “It eliminates a portion of your school [maintenance and operations] tax bill.”
Homeowners aged 65 years or older would qualify for an additional $10,000, for a total exemption of $150,000. Bettencourt says the actions of the legislature over the past few years have significantly reduced the tax burden of Texas senior citizens.
“We have many over-65s in the state that are now paying zero tax as a result, and their bills that are not at zero are coming down each year,” he said.
Prior to 2022, senior citizens had their property tax rates frozen, meaning they couldn’t rise, but also that they couldn’t go down in the event of a tax cut.
“The best they could expect was that they weren’t going to pay more on that school tax bill every year,” said Bettencourt.
That changed when the voters approved a measure in 2022 that would allow the reduction of frozen tax rates for senior and disabled homeowners when the legislature cuts property tax rates.
“As either the tax rate goes down or the exemption goes up, that frozen value is un-frozen, and then the new lower result is then re-frozen, and the over-65 tax bills go down,” Bettencourt explained.
As with previous measures that cut school property tax rates, the bill includes a hold harmless provision that promises the state will make up any revenue lost by school districts.
The measure would add to the ongoing costs of previous sessions’ tax relief efforts, which Bettencourt says is around $32 billion coming into the 89th Session.
“When you commit to property tax relief, you have to commit, and you have to keep committing, you have to keep doing it every year,” he said. “Whether that money comes in for rate compression, or it comes in for homestead exemption, it has to go into the budget to work.”
Abbott named property tax cuts as an emergency issue in his State of the State Address on February 2, clearing the way for passage of the measure within the first 60 days of the regular session. With 28 of 30 senators signed on as co-authors, the bill should sail through the full Senate when it comes up on the floor later this week or next.
If the bill and joint resolution pass both chambers, voters must still approve the increased exemption.
This proposal would appear as a question on the general election ballot in November. Previous ballot questions on the issue proved overwhelmingly popular, passing with greater than 80 percent support in 2015, 2022, and 2023.