At a glance
House members voted to raise tax exemptions on all Texans’ homes, with the largest proposed tax cut for people who are over 65 years old or have a disability.
Senate Bill 4 would raise the statewide homestead exemption from $100,000 to $140,000, applying only to taxes levied by public schools. SB 23 would give homeowners who are over 65 years old or have a disability a $200,000 exemption from school taxes.
House members voted unanimously to initially approve both bills May 20. One more procedural vote is required before the measures can return to the Senate with minor amendments.
One day earlier, House lawmakers accepted senators’ amendments to House Bill 9, which would exempt up to $125,000 of businesses’ personal property, such as equipment, furniture and vehicles, from taxation. Texas business owners currently receive a tax exemption on property worth $2,500 or less. HB 9 is headed to Gov. Greg Abbott’s desk.
Rep. Morgan Meyer, R-University Park, said the three bills made up a “tightly-negotiated tax relief package.”
The state will spend about $10 billion to raise the homestead exemption, increase the business tax exemption and continue cutting school district tax rates as a result of state laws passed in 2019 and 2023, Meyer said on the House floor.
“We’re providing as much property tax relief as we can within the confines of our budget, a budget that spent a huge portion of the surplus that we had on other things other than property tax relief,” Meyer said May 20. “We have infrastructure to pay for, public education to pay for.”
All three bills are accompanied by proposed constitutional amendments, which are set to appear on Texas voters’ ballots in November.
More details
The average Texas homeowner would see nearly $500 in annual savings under the tax relief package, according to estimates by bill author Sen. Paul Bettencourt, R-Houston. Seniors and people with disabilities would save about $950 on their annual property tax bills, he said.
Bettencourt told state senators in February that the average home value is below $140,000 in about 49% of Texas school districts. This means the average homeowner in those areas would not pay any property taxes to their local school districts under the $140,000 exemption proposed by SB 4.
House lawmakers approved minor amendments to SB 4 and SB 23, which Meyer said would ensure school districts are “held harmless” and do not lose revenue as a result of the proposed tax cut. If the Senate approves these amendments, the full property package will be sent to the governor for his signature.
The deal was praised by both Bettencourt and Meyer in committee hearings earlier in May, in contrast with a roughly seven-month rift that kept lawmakers in Austin for two extra months during the 2023 legislative session.
Rep. Armando Walle, D-Houston, said May 20 that he was concerned the tax relief bills would not benefit millions of Texas renters.
“A lot of renters indirectly pay a property tax by their monthly payments,” Walle said on the House floor. “We need to continue to look at renters, those folks that are working shift jobs or may not have enough yet to save up for a home.”
The debate
On the House floor May 20, Rep. Mike Olcott, R-Fort Worth, proposed an amendment that would raise the statewide homestead exemption to $160,000, up from the $140,000 proposed in SB 4.
“I'm just disappointed in the amount of property tax relief that we're going to be giving to our citizens of this great state,” Olcott said, urging lawmakers to spend more of the state’s nearly $24 billion surplus on property tax cuts.
Rep. Trey Martinez Fischer, D-San Antonio, said lawmakers would have to “cut other parts of the budget to pay for this.” Martinez Fischer is the vice chair of the House’s tax-writing committee.
“Anybody who votes [against this amendment], they're not against cutting property taxes. We're about to cut them again. ... We are doing these tax cuts within our means,” Martinez Fischer said.
Olcott’s amendment was voted down.
Rep. Ellen Troxclair, R-Lakeway, noted that the state does not levy property taxes on residents. Property taxes are charged by local government entities, including cities, counties, school districts and hospital districts.
“The only thing that we can do is try our best to use our surplus from our thriving economy and sales taxes to buy down those property taxes,” Troxclair said on the House floor. “That will get eaten up if we do not have responsible actors at the local government who are keeping their taxes low on the residents that they serve.”
Troxclair authored legislation that aims to make it harder for municipalities to raise property taxes after a disaster. That bill, HB 30, is headed to the governor’s desk.
Rep. Brian Harrison, R-Midlothian, said property taxes “prevent any Texan from ever truly owning their home.”
“Texans are being taxed out of their homes,” Harrison said May 20. “If there was only one thing that they demanded we do this session, it was deal with property taxes ... and pass bills to eliminate property taxes in Texas.”
In September, state budget analysts told a Senate committee that ending all local property taxes would cost the state about $81.5 billion annually, which could mean eliminating vital state services or nearly quadrupling the state sales tax rate.
Terry Canales, D-Edinburg, echoed some of Harrison’s comments, arguing that lawmakers need to “rein in the tax rates.”
“I think this [bill] is just a band-aid, and I'll take a band-aid when we're bleeding,” Canales said. “But the reality is, if we really want to help people, we've got to work on the rate at which people are getting taxed.”
