A Texas Senate panel votes on reducing property taxes for homeowners. On Tuesday, the committee unanimously and quickly proposed providing homeowners with billions of tax breaks to reduce the state’s high property taxes.
Senate Bill 4 is the chamber’s most important property tax-cutting proposal. It would limit the homestead exemption for school district taxes to $140,000, the amount that’s exempted by law from taxation to pay public schools. The current exemption is $100,000.
The Senate Local Government Committee passed the bill on Tuesday by a vote of 6-0. The Senate will now vote on it as a whole.
The bill’s author, Houston Republican state senator Paul Bettencourt, said: “This money is for people to stay in their homes.”
Texas Senate panel votes on reducing property tax for homeowners
Texas lawmakers have committed to tackling their state’s high property tax burden this year to provide relief to homeowners and business owners. Gov. Greg Abbott declared property tax cuts as an “emergency” item, enabling lawmakers to pass legislation quickly – and urged them to spend millions to continue cutting property tax.
Senate budget writers set aside $3 billion to increase the homestead exemption, which will be included in the state budget for the next two years. According to the Legislative Budget Board estimate, increasing the homestead exemption would cost the state $7.7 billion in 2030.
Legislators expect to spend an additional $3 billion over the next two fiscal years to help school districts lower their tax rates, a commitment lawmakers made in previous sessions.
A Texas Tribune calculation shows that if these measures had been implemented, they would have saved an average homeowner who paid the school district’s average tax rate of $528 in taxes for last year.
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According to the Tax Foundation, Texans are among the top taxpayers in the nation when it comes to property taxes. These bills are high because Texas does not have an income tax. Instead, it relies heavily on property taxes to fund public services such as schools, police officers, firefighters, and roads. U.S. Census Bureau figures show that the median Texas homeowner’s taxes rose by nearly 30% between 2010 and 2023. This is almost three times faster than the rest of the country.
Over the last few years, Republican legislators have been working to reduce rising property taxes. This push culminated in 2024 with $12.7 billion of new tax cuts. These included a boost in the homestead exemption for state residents and billions in funding for school districts to reduce their property tax collection.
A Texas Tribune analysis found that homeowners across the state have seen relief since this legislation was combined with other measures enacted in 2019.
Estimates from the Texas Comptroller’s Office show that the amount of money collected by school districts from property taxes increased in 2024 after revenues had fallen the previous year. According to a Tribune estimation based on local tax rates and appraisal data, the average homeowner’s bill in Travis, Harris, and Dallas counties has also increased. This is partly due to an increase in property values. Some localities within the counties of Travis and Harris also increased their tax rates.
Texas’s 4.2 million renter households will not directly benefit from a rise in homestead exemptions because they are not eligible to claim them. Texas does not provide tenants with the same tax relief as homeowners.
Bettencourt responded to a question by state Sen. Molly Cook of Houston, a Democrat. Bettencourt stated that renters would benefit from the $3 Billion lawmakers plan to spend to reduce school tax rates because landlords are likely to pass on tax savings to tenants to remain competitive. Rent growth in Texas’s major metro areas has been slowing down. In the Austin area, rents have fallen for the past two years.
Supporters of the bill said that increasing the homestead exemption will lower costs for homeowners who face increased housing costs, not only from taxes but also on items like homeowners insurance. The bill supporters said that expanding the homestead exemption would lower the barriers to homeownership in Texas for those who might otherwise struggle to get ahead in the current housing market. This could include first-time buyers or homeowners who want to move. Dixon Holman is an Arlington realtor serving on the Texas Realtors board.
Holman, Holman’s deputy to the House of Representatives, said on Tuesday that while it is not a panacea, it does make a difference.
A study by New York University and the University of Hamburg indicates that more excellent tax breaks could lead to higher home prices. Researchers found that homeowners who receive a more significant tax benefit are less likely to move. Fewer houses on the market lead to increased competition over a limited number of houses, which drives up prices. Texas now has more homes for sale than during the COVID-19 Pandemic, but it still faces a severe shortage.
Senate lawmakers have allocated another $500 million for business tax reductions. The accompanying legislation has yet to be filed, so exactly how these tax cuts will work is unclear.
The Texas House has not yet clarified its plans for property tax reductions this year. The newly elected House Speaker Dustin Burrows of Lubbock has not yet assigned members to committees, so legislation in this chamber has yet to move.
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