Texas Homeowners Could Get Major Tax Cuts

The Texas House of Representatives voted unanimously on Tuesday to advance two bills that could give homeowners significant relief on their property taxes.

Why It Matters

Texas lawmakers' efforts to lower the property tax burden on homeowners are part of a nationwide movement spearheaded by GOP-led states to significantly curtail or even eliminate property taxes. Four states — including Florida, Illinois, Kansas, and Pennsylvania — currently have plans to abolish property taxes entirely.

In the Lone Star state, the issue is particularly urgent. Property taxes have skyrocketed since the pandemic, as higher demand driven by out-of-state newcomers led to a surge in home values.

While Texas does not levy a personal income tax and has no state property tax, homeowners pay among the highest property taxes in the country to local governments. The money is used for crucial local services including schools, streets, roads, police and firefighting.

What To Know

Texas lawmakers plan to spend at least $51 billion of state funds to cut property taxes for homeowners in the next two years — a measure that Republican Governor Greg Abbott described in February as an emergency item for the new legislative session.

The two bills moved forward by the House this week are Senate Bill 4 and Senate Bill 23, both introduced by Sen. Paul Bettencourt, a Houston Republican. SB 4 would change the state's homestead exemption from $100,000 to $140,000, reducing the required threshold for a home's taxable value.

According to the bill's supporters, the proposal would save eligible homeowners' nearly $500 in property taxes every year.

SB 23 would raise a different homestead exemption for older homeowners or those with disabilities from $10,000 to $60,000. This is on top of the exemptions for all Texas homeowners.

Bettencourt said the higher exemption would save disabled and senior homeowners more than $950 annually in property taxes.

Meanwhile, House Bill 9, introduced by Republican Rep. Morgan Meyer, aims to provide relief to businesses in the state. The bill aims at exempting up to $125,000 of businesses' inventory from being taxed by school districts, cities, counties, and any other local governments.

This bill was approved by the Senate last week and changes made by the chamber were signed off by the House on Monday.

Newsweek contacted Bettencourt's office for comment on Wednesday morning.

What People Are Saying

Rep. Morgan Meyer (R-University Park), the House sponsor of SB 4, said on Tuesday: "This is a tightly negotiated relief package. This is the amount of money that we have for property tax relief, so we need to stick to what has been agreed to with the Senate and the governor... Every member of this chamber wants as much property tax relief as we can, but only what we can afford."

Rep. Brian Harrison (R-Midlothian) said on the House floor on Tuesday: "You may call yourself a homeowner in the state of Texas, but the reality is, you are just a renter, and the government is your landlord. And if you don't believe me, try not paying your property tax till the end of the year. You will find out real fast who really owns your home in this state. Apparently, this is the best we are going to get this session."

What Happens Next

The two bills — SB 4 and SB 23 — must come back before the House on Wednesday for a final vote. The bills then return to the Senate, which must approve any changes introduced by the House before sending them to Gov. Abbott.

The current legislative session ends on June 5. Lawmakers have until then to make sure their proposals reach the governor.

The bills, however, require amendments to the Texas Constitution to come into effect, which will require the approval of the state's voters.