Property Tax Relief Bill Moves Through Texas Legislature

Ali Linan May 25, 2023

AUSTIN — The Texas House unanimously approved a property tax relief plan on Friday.

The bill is a combination of several house and senate property tax priorities and promises to be the largest tax cut in state history, said House Speaker Dade Phelan, R-Beaumont.

“Thank you to Chairman (state Rep. Morgan Meyer, R-University Park) and the rest of my colleagues in the Texas House for working hard to pass a second property tax relief proposal that would deliver immediate and permanent relief to Texans,” he said in a statement.

Senate Bill 3 is currently set to provide over $21 billion in property tax relief when combined with the state budget, per the house version. The house version of SB 3, however, is different from what was originally proposed.

Over three bills, the senate looked to address school compression rates, homestead exemptions and business property exemptions. The house version includes a school tax rate compression, a homestead exemption and an appraisal cap on residential and commercial property.


The original senate version looked to dedicate $5.38 million to compress school district tax rates an additional 7.03 cents.

The house version has a 15-cent school district tax rate compression, leading to an over 25-cent compression when coupled with the 10-cent compression already contained in House Bill 1, the state’s proposed budget for the next biennium, officials said.

Under the house legislation, the state’s share of public education will increase to 54% and reduce recapture payments – or local dollars sent back to the state for redistribution – by about $7.4 billion over the next biennium, they added.

The senate version looked to increase the homestead exemption from $40,000 to $70,000. It also gave homeowners who qualify for the Over-65 Exemption an additional $30,000 exemption, bringing the homestead exemption for older Texans to $100,000.

The house version increases the homesteads exemption from $40,000 to $100,000 for all Texas homeowners. Texans over the age of 65 will see an even higher homestead exemption due to the $10,000 exemption currently in place for elderly and disabled homeowners.

The senate version looked to help commercial property owners by allocating $1.05 billion for inventory tax credits and offered a $25,000 Business Personal Property tax exemption. Currently there is no tax exemption for commercial properties.

The house instead favors appraisal caps. The latest version includes a 5% annual cap on the taxable assessment of residential and commercial property. Under current Texas law, there is a 10% appraisal cap for homeowners and no cap for owners of commercial property.

“(The appraisal caps) will prohibit the increase on what our homeowners are paying,” said state Rep. Morgan Meyer, R-University Park.

Meyers added that the appraisal caps are a built-in safety measure to ensure appraisal districts do not raise values in order to offset losses from the larger exemptions.

Lt. Gov. Dan Patrick and other senior members of the senate said they were completely against appraisal caps, stating they believe they do not work and that it was non-negotiable to put them in the bill.

Even so, Patrick and Phelan shook hands on the senate floor soon after the house vote on Friday and agreed to work together on “a lot of things.” Both have named addressing rising property taxes a top priority this legislative session.

“So the Speaker and I had a very good meeting, working on a lot of things, working together, right?” Patrick said, to which Phelan responded “Absolutely.”

Under the latest version of the bill, the owner of a $350,000 home — the average home value in Texas, according to the Texas A&M Real Estate Center — will see about $2,800 in savings over the next two years, while Texas seniors who own a home of the same value will save at least $3,000 over the same time frame, officials said.

The property tax bill will now go back to the senate, which will need to accept changes made by the house. Should the senate not agree, the bill will move to a conference committee made up of members from both chambers to iron out the differences.

The last day of session is May 29.

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Property Tax Relief Bill Moves Through Texas Legislature

Texas law, there is a 10% appraisal cap for homeowners and no cap for owners of commercial property.

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