A package of property tax cuts for homeowners is on its way to Gov. Greg Abbott — and Texas voters — after two key bills raising the state’s homestead exemption won unanimous final age Thursday in the Texas Legislature.
Lt. Gov. Dan Patrick, who has pushed to raise the state homestead exemption for several sessions, said the state’s top Republicans had no problem hammering out their answer to skyrocketing property taxes.
Voters will be asked in November to approve two constitutional amendments — one to raise the exemption from $100,000 to $140,000 and the second to raise it to $200,000 for Texans with disabilities or who are 65 and older.
Those amendments were filed with the Secretary of State last week. On Thursday, the legislation enacting those amendments — if they’re approved — was sent to Abbott’s desk.
“I’m looking forward to what I think will be a record turnout by the public,” said Sen. Paul Bettencourt, R-Houston, the bills’ author. “This is great news, because these commitments — once they’re enshrined in the constitution — are going to be there forever.”
Abbott, Patrick and House Speaker Dustin Burrows met regularly to discuss the best way to send $10 billion back to homeowners and small businesses, which all three considered a session priority, Patrick said.
That comes in stark contrast to the dramatic wranglings of last session, when disagreements between the House and Senate forced two special sessions on the issue before the end of the summer.
“The speaker and I came to agreement on this bill, and this amount, pretty much in 15 minutes of conversation and a handshake,” Patrick said. “And that’s the way we like to do business with the Texas House.”
The property tax exemptions — which won overwhelming bipartisan in the Texas House and Senate — will cost the state’s general revenue fund about $3 billion. Another $3.5 billion will pay for reduced school district taxes.
“This is a great day for Texas,” Sen. Royce West, D-Dallas, said. “For those of you who say that Democrats and Republicans can’t work together, we can work together. The fact is, when we have common interests, when everyone is on board, up front and has input into the decision-making process, then we can work together.”
The funding for the tax relief is in the final versions of the state budget for the next two years and is expected to be approved by lawmakers within days.
Lawmakers also plan to set aside an additional $3 billion in a property tax relief fund to for gaps or pay for future efforts.
The state now carries about 56% of Texas homeowners’ school tax burden, Bettencourt has said.
The exemptions are only for homesteads — homes in which the owner lives — so don’t apply to renters or business properties. A business personal property exemption increase was sent to the governor last week.
The $140,000 exemption in Senate Bill 4, which would apply to all homeowners, would save an average of nearly $500 in taxes per year when combined with the lower school district taxes in the state budget, Bettencourt said.
SB 4 includes a provision guaranteeing school districts would not lose funding because of the higher exemption. The state would make up the difference.
Seniors and Texans with disabilities, whose exemptions are raised to $200,000 in Senate Bill 23, would see average savings of more than $900 between the exemption and the school taxes, he said.
With the average home value for Texas seniors sitting under $200,000, the exemption means most of that population will end up paying no property taxes at all, lawmakers said.
“You’ve always heard that mantra, ‘I don’t want to rent my home — after it’s paid for — from my school district,’ ” Patrick said. “Well, seniors, to the average senior out there, you’re never going to have to do that again.”
In 2023, voters approved raising the school district tax exemption from $40,000 to $100,000 after a hard-fought battle by lawmakers. That was estimated to have saved Texas homeowners an average of $700 on their bills. That $18 billion property tax package included some $12.7 billion in new cuts.