The three proposals passed the Texas House and Senate with nearly unanimous support in May, and Gov. Greg Abbott signed them into law June 16. But because the tax cuts would be enshrined in the state Constitution, voters will have the final say.
“Do you think your property taxes are too high? So do I,” Abbott told residents of Robson Ranch, a senior living community in Denton, on June 16. “I’m going to sign three pieces of legislation that lower those taxes.”
What you need to know
If voters approve the constitutional amendments Nov. 4, homeowners will see increased exemptions from school district taxes, with the largest reduction for seniors and people with disabilities. Business owners would also see a reduction in the taxes paid on their inventory.
Senate Bill 4 would raise the statewide homestead exemption from $100,000 to $140,000, and SB 23 would give homeowners who are over 65 years old or have a disability a $200,000 exemption. Both exemptions would apply only to taxes levied by public schools.
Bill author Sen. Paul Bettencourt, R-Houston, urged voters to approve the proposed tax cuts this fall.
“You’ve paid a lifetime of taxes already,” he said June 16. “The state of Texas makes a massive commitment to make sure that you can stay in your home for as long as you want to, because these exemptions, once you vote for them in November, will be there for as long as you own the home. ... It’s going to be your exemption for life.”
Bettencourt’s office estimated that the average Texas homeowner would see about $484 in annual savings if the tax cuts are approved by voters, with roughly $950 in savings for seniors and people with disabilities. These estimates do not account for potential tax rate increases by local school districts or other entities.
House Bill 9, by Rep. Morgan Meyer, R-University Park, 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.
“Letting [small businesses] keep more of their hard-earned money—they're going to put that money into growing their business, hiring more employees, expanding,” House Speaker Dustin Burrows, R-Lubbock, said June 16. “That is the type of capital they're going to get to keep, that will be a stimulus, that will make our economy continue to hum.”
Bettencourt’s office estimated that the average small business owner would save about $2,500 per year under HB 9.
The context
Texas lawmakers voted to spend $10 billion to ensure school districts do not lose revenue as a result of the proposed tax breaks. In total, the state will spend $51 billion, or 15% of the 2026-27 budget, to maintain existing property tax relief and fund the expanded exemptions during the upcoming biennium.
Abbott said June 16 that he believes Texas can spend $51 billion on tax relief because of the state’s “robust economy,” citing the nearly $24 billion budget surplus that was available this legislative session.
“Texas has the largest budget surplus as of any state, [but] we've been cautious with our approach to our budget, knowing there could be an economic downturn, there could be a recession,” Abbott said. “We have some other reserve money to make sure that we will be able to continue to maintain the property tax relief in the future that we provide today.”
The proposed tax cuts will appear on the Nov. 4 ballot as state propositions, alongside measures aimed at funding water supply projects, limiting when defendants can be released on bail and creating a state dementia research institute. Texas’ constitutional amendment elections typically occur after a legislative session, with voters approving 13 of 14 propositions in November 2023.
Another perspective
During the legislative session, some lawmakers and tax analysts expressed concerns the proposed tax cuts would not benefit some Texans, including renters.
“A lot of renters indirectly pay a property tax by their monthly payments,” Rep. Armando Walle, D-Houston, said on the House floor May 20. “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.”
Shannon Halbrook, a fiscal analyst for the progressive think tank Every Texan, told a Senate committee in April that about 37% of Texans rent their homes.
“Many Texans are struggling with the cost of housing—it's not just homeowners,” he said. “I’d love something like a circuit breaker, which uses the ability to pay and ... incorporates income into the amount that folks are liable for.”
In 2023, lawmakers approved a “circuit breaker” that prevents the value of commercial and residential property worth $5 million or less from increasing by more than 20% per year. Also known as an appraisal cap, this applies to property other than someone’s primary home and runs through 2026, according to previous Community Impact reporting.
Some lawmakers said in 2023 that the circuit breaker policy passed in 2023 would allow landlords to pass property tax savings on to renters, although the legislation does not directly impact renters.
One more thing
The state of Texas does not charge property taxes, meaning homeowners are taxed by local entities such as school districts, cities, counties, hospital districts and municipal utility districts.
If a school district wants to boost its revenue by increasing the local maintenance and operations tax rate above a threshold set by the state, it must first hold a special election known as a voter-approval tax rate election, or VATRE. Cities and counties can raise tax rates by 3.5% per year, according to the state.
The governor said in February that he believes taxing entities should be required to receive two-thirds approval from local voters during a general election before they can raise taxes. After the regular legislative session ended in early June, he suggested that lawmakers enact local spending limits to restrict how much entities can raise taxes.
“No country, no state, no city and no county can tax and spend their way into prosperity,” Burrows said June 16. “That is why it is so important that we make sure that we have a low-tax state.”
Looking ahead
The Texas Legislature meets for 140 days every two years, meaning lawmakers are not scheduled to return to Austin to debate property taxes and other issues until January 2027. Abbott can call lawmakers back for a special session at any time.
“Right now, I haven't identified a need for a special session,” Abbott said June 11. “I wouldn't do that until I get through all the bills [on my desk]. You'll see some more vetoes come up, I suspect, in the coming days. We'll need to take a look at what things look like after that.”
Abbott has until June 22 to sign or veto hundreds of bills, and those he does not take action on will automatically become law.
