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Texas Senate Unanimously Passes Property Tax Relief Proposals – What It Means for Homeowners

March 22, 2023
Jeramy Kitchen
88th Legislative Session, Dan Patrick, Homestead Exemption, Property Tax

On Wednesday, the Texas Senate unanimously passed all three property tax relief proposals prioritized by Texas Lt. Gov. Dan Patrick.

Property Tax Relief ‘Package’

Of the three pieces of legislation considered as a part of the prioritized property tax relief package, Senate Bill 3, authored by Republican State Sen. Paul Bettencourt (Houston), seeks to increase the homestead exemption from $40,000 to $70,000 while also allowing seniors or disabled Texans to deduct an additional $30,000 (so up to $100,000).

Senate Bill 4, also authored by Bettencourt, uses an additional $5.4 billion to provide an additional 7 cents worth of rate compression (amounting to about 74 cents per $100 value by 2025). It also uses an additional $0.4 billion to reduce recapture.

Senate Bill 5, authored by Republican State Sen. Tan Parker (Flower Mound), simultaneously works to exempt the first $25,000 of personal property claimed by a business from the property tax. It also provides a new franchise tax credit of up to 20% of the amount of property taxes paid on the inventory itself. 

What Is Next?

The property tax relief package now goes to the Texas House of Representatives. It is unclear whether it will be considered, given that Texas House leadership has prioritized legislation that takes a different approach to property tax relief.

House Bill 2, authored by Republican State Rep. Morgan Meyer (Dallas), recently passed out of the House Ways and Means Committee with the support of 10 of the 11 committee members. The lone nay vote was that of Democrat State Rep. Chris Turner (Grand Prairie). He took to Twitter to explain:

His opposition is notable because he echoes concerns of several organizations and individuals who testified on the legislation and are against an approach focused on lowering the appraisal cap as a means of providing property tax relief. Texans for Fiscal Responsibility (TFR) also testified to this fact, among other concerns.

It is expected that House Bill 2 will make its way to be considered by the overall House of Representatives in the next few weeks.

Regardless of which proposal wins out through the entirety of the legislative process, voters will ultimately decide once it is put on the ballot months later.

Preferred Approaches

TFR has long believed that the most effective way to provide tangible property tax relief to taxpayers burdened with ever-increasing taxes is the compression or buying down of the school district M&O (Maintenance & Operations) portion of the property tax, which is about 45% of all property taxes collected by local government in Texas. It is also the largest portion that funds independent school districts across the state, which are funded by school finance formulas set by the Texas Legislature.

This legislative session provides a historic opportunity for lawmakers to provide real property tax relief and a path to the elimination of property taxes—which are highly burdensome, immoral, and costly to administer—using the existing budget surplus. Moreover, with some key policy changes, the path to elimination could be much shorter if lawmakers choose to get serious about their own spending habits and those of local governments. For a list of legislation that does all of the above, click here.

For a summary of the leading property tax relief proposals, go here.

For a one-page chart comparing the leading property tax relief proposals, go here.

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