What is in Texas’ property tax proposal?

The bill provides for $12.7 billion in tax relief for property owners through four main avenues:

  • Reducing school district property tax rates by subsidizing public education with an additional $12 billion;
  • Raising the homestead exemption from $40,000 to $100,000;
  • Limiting appraisal value increases to 20% per year for non-homesteaded properties under $5 million, as part of a 3-year pilot program; and,
  • Exempting businesses with annual revenue of less than $2.47 million from the franchise tax, up from a $1.23 million exemption threshold.

In addition, it requires counties with 75,000 or more people to have an appraisal district board of directors with up to five directors appointed by the taxing units (a political unit that is authorized to impose ad valorem taxes on property), three directors elected by county voters and the county assessor-collector.

When does this take effect?

In Texas, any new law that impacts the state budget must have the consent of voters, who must pass an amendment to the state constitution.

November’s election day ballot will ask voters whether or not they want the state to spend funds on property tax relief. What will appear on the ballot is below:

“The constitutional amendment to authorize the legislature to establish a temporary limit on the maximum appraised value of real property other than a residence homestead for ad valorem tax purposes; to increase the amount of the exemption from ad valorem taxation by a school district applicable to residence homesteads from $40,000 to $100,000; to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in certain exemption amounts; to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations; and to authorize the legislature to provide for a four-year term of office for a member of the board of directors of certain appraisal districts.”


What does this mean for renters?

Very little — the bill passed by the Texas Legislature does not provide any direct relief to renters.

A proposal by State Rep. John Bryant, D-Dallas, would have provided a rebate to renters; however, it failed to pass the Texas House.

What does this mean for schools?

The law, if approved by Texas voters, will require the Commissioner of Education to recalculate every district’s tax rate with a 10.7% reduction. Those rates will vary by district, but all must stay within 90% of each other.

According to the Legislative Budget Board, public school districts will receive less revenue to fund operations under this law. To make up the decreased revenue, the State of Texas will provide an additional $12 billion to its education budget.

Public eductation advocates tell KXAN they believe this to be unsustainable after the $12 billion is used, but Abbott and Lt. Gov. Dan Patrick both defend the bill as sustainable.