Texas Delivers Real Property Tax Relief: Bigger Exemptions, Lower Rates, and Rainy Day Funds at Work

🏠 Expanded Homestead Exemptions

 
Under Senate Bill 4, the homestead exemption for school property taxes would increase from $100,000 to $140,000 for most homeowners. For seniors and homeowners with disabilities, Senate Bill 23 proposes an additional $60,000 exemption, bringing their total to $200,000. This means that many in this group could see their school property taxes significantly reduced or even eliminated. These measures are expected to benefit approximately 5.7 million Texas homeowners, with average annual savings estimated at $484, and up to $950 for seniors and disabled homeowners.
 
📉 School Tax Rate Compression

To further alleviate the tax burden, the state plans to implement a compression of school district maintenance and operations tax rates. This involves the state allocating funds to school districts to offset reductions in local property tax revenues, effectively lowering the tax rates imposed on property owners. Combined with the increased homestead exemptions, this strategy aims to provide comprehensive tax relief without compromising school funding .
 
💰 State Funding Commitment

The state has committed approximately $51 billion over the next two years to fund these tax relief measures. This includes reimbursements to school districts for lost revenue due to increased exemptions and compressed tax rates. The funding will be sourced from the state's budget surplus and the Economic Stabilization Fund, commonly known as the "Rainy Day Fund".

🗳️ Voter Approval Required

These reforms are contingent upon voter approval in the November 2025 election. If approved, the changes will be applied retroactively to the 2025 tax year, providing immediate relief to property owners. Historically, Texas voters have supported similar tax relief measures, indicating a favorable outlook for the upcoming referendum.