How much money will Texas property tax cut plans actually save you? We did the math
Lawmakers in Austin are promising property tax relief, but the savings when you see your bill may be less than you hoped.
A Star-Telegram analysis of House and Senate proposals to cut school property taxes found that increasing home appraisals could dampen tax bill savings, if city, county and other property tax rates are not significantly dropped.
The two chambers are in a standoff over the best way to deliver property tax relief. The House favors using more than $17 billion to fund public schools so they can reduce their property tax rates. School taxes are typically the largest portion of a property tax bill.
The Senate proposes cutting the school tax rate and increasing the homestead exemption on school property taxes from $40,000 to $100,000.
Either way, without changes in local taxes and if home appraisals increase, bills could be higher than taxpayers would expect.
Both chambers have passed their versions of a property tax cut bill, but the House has adjourned for the special session and proposals must pass both chambers before going to Abbott’s desk to be signed into law.
The governor on Monday said he’s had conversations with both Lt. Gov. Dan Patrick and House Speaker Dade Phelan.
“The most important thing is that they work together and hammer out their differences and get a bill to my desk as quick as possible,” Abbott said.
Calculating your tax bill
Take a $350,000 home in the Fort Worth school district, where the homeowner is claiming the $40,000 homestead exemption.
Assume the home is in the tax districts for the city of Fort Worth, Tarrant County, the Tarrant Regional Water District, JPS Health Network and Tarrant County College and the rates for those districts don’t change in the coming tax cycle. Property tax rates, including for schools, are set locally.
If that home’s appraisal were to go up 10%, the homeowner would save $78 on their annual tax bill compared to the year prior under the House plan and save $507 under the Senate’s.
Tarrant County has approved a 10% homestead exemption for county residents, which means an extra $78. Commissioners also approved a a maximum 10% exemption to the hospital district, another extra $78. That is, unless appraisals are up by 10%, then you’d save about $86.
As the Legislature focuses on school property taxes, each city and county “must do their part to provide actual tax relief,” County Judge Tim O’Hare said in a June 6 Twitter post.
Will the House and Senate reach an agreement?
Patrick has said his plan would be more beneficial to homeowners because it allocates money specifically for a homestead exemption.
“If you take $17.6 billion and give it to everyone, then the homeowner’s tax cut is diluted,” he said of the House plan.
Abbott has expressed support for the House’s bill and eventually eliminating school Maintenance and Operation property taxes. In his call for a special session, the governor was specific that property tax rate cuts should be delivered “solely by reducing the school district maximum compressed tax.”
Phelan has previously advocated for lowering the state’s cap on home appraisal increases and expanding that cap to all property types. An appraisal cap was not part of the House’s latest bill.
“His special session call gave us clear-cut direction to buy down property taxes using tax compression, and the passage of today’s legislation fulfills that call,” Phelan said in a May 30 statement.
The majority of House Republican freshmen in a Monday letter said dropping the appraisal cap could be a negotiation point for the two chambers, if the Senate insists on a larger homestead exemption and compromise is needed. The exemption is an excellent tool in moderation, but overreliance shifts the tax burden to renters and small business owners, the letter reads.
They’d support a combination of rate cuts, a homestead exemption and a cap on appraised values.
“We may never have this historic surplus again, and we must use this opportunity to provide significant relief into perpetuity,” the letter reads.
This story was originally published June 16, 2023 at 6:00 AM.
