After months of debate, political posturing, stalemate, and eventually a consensus deal between both chambers of the Texas Legislature, the long-awaited property tax relief package has finally been signed into law by Texas Governor Greg Abbott.
Governor Abbott officially signed the relief package into law over the weekend, as indicated online.
The primary components of the relief package consist of:
- Approximately $7 billion in school Maintenance & Operation (M&O) tax compression
- An increase in homestead exemptions from $40,000 to $100,000
- Roughly $600 million in increases to franchise tax exceptions
- A three-year pilot program of 20% property tax “circuit breakers” on non-homesteaded properties worth less than $5 million (essentially like an appraisal cap)
- The creation of three elected positions on appraisal review boards in counties with a population of 75,000 or more
Despite some claims to the contrary, the total amount of new property tax relief in the package equates to roughly $12.7 billion. While most property owners will see at least some tax relief, this number unfortunately falls short of actually being the largest property tax cut in Texas history, with the first-place spot going to relief passed in 2008. This amount also falls short of being at least half of the projected budget surplus (~$33 billion), which would require $16.5 billion.
Regrettably, without spending or revenue caps on local governments and schools, much of the relief that homeowners experienced from the $100,000 homestead exemption will slowly evaporate over the next several years as inflation and appraisals rise.
Of course, some relief is certainly better than no relief.
However, the only way Texans will see real, lasting tax relief will be by compressing property tax rates with state dollars and eventually eliminating property taxes altogether. This is the way forward to securing private property rights in the Lone Star State.
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