Homeowners Rejoice: Property Tax Cuts on the Horizon

Texans may soon experience the most substantial property tax cut in state history, thanks to recent legislative efforts. Governor Greg Abbott has prioritized it, and both the Senate and House have proposed ideas on how to achieve it. The Senate has passed a set of bills that would reduce property taxes by $16.5 billion, while the House has its bill that would cut taxes by over $17 billion.

The key to the efforts is Senate Bill 3, which would significantly increase the homestead exemption. Homeowners would only be taxed beyond the first $70,000 of their home’s value, and seniors and disabled homeowners would receive a higher exemption of $100,000. This would occur just one year after voters passed a constitutional amendment raising the homestead exemption to $40,000.

The Senate’s second bill, SB 4, aims to reduce the number of school districts impacted by recapture, a formula that requires wealthier school districts to assist less-affluent ones. This could benefit Houston ISD, which has generally been viewed as a wealthier school district despite varying incomes among residents.

The third bill, SB 5, aims to lower property taxes for businesses. It would increase the business personal property tax exemption from $2,500 to $25,000 and reduce the inventory tax bill by 20%, leading to a tax cut of $1.5 billion for businesses.

The House has proposed its version, House Bill 2. This bill would lower the maximum school district tax rate and reduce the appraisal cap, so appraisals would rise 5% per year at most instead of 10%. Together with the House’s budget bill (HB 1), it would cut taxes by more than $17 billion, exceeding the Senate’s package.

However, not everyone is in favor of the House’s plan. Some, like Dale Craymer, president of the Texas Taxpayers and Research Association, support reducing the tax rate but oppose the appraisal cap. Lieutenant Governor Dan Patrick has also expressed apprehension about the appraisal cap, warning that it could lead to increased tax rates down the line.

In addition to property tax reform, lawmakers are also considering other tax-related bills. State Senator Royce West has introduced SB 1000, a bill that would reduce the state’s sales tax by half a percent, from 6.25% to 5.75%. However, some experts caution that cutting taxes now could result in reduced spending on essential services in the future.

Before a bill becomes law in Texas, it must be passed by both the House and the Senate and then signed by the governor. However, there are a few more steps that must be taken before a bill reaches the governor’s desk. If the House and Senate pass different versions of the same bill, a conference committee is formed to reconcile the differences between the two versions. Once the conference committee reaches an agreement, both the House and Senate must approve the final version of the bill before sending it to the governor. The governor then has 10 days to sign or veto the bill. If the governor vetoes a bill, the Legislature can override the veto with a two-thirds majority vote in both the House and Senate.

Regardless of the outcome, it is clear that Texans are eager for property tax relief. Appraisal boards and rapidly rising property values have left many homeowners and businesses struggling to keep up with their tax bills. The Senate and House bills have the potential to provide much-needed relief to taxpayers, but it remains to be seen whether they can come to a consensus on how to achieve it.