I’m a Texas homeowner. When will I see my tax cut?

Homes along central Longview's Centenary Drive on Friday Dec. 17, 2021. Property owners can expect to see their tax bill drop after voters approved a series of amendments during the 2023 election. (Credit: Michael Cavazos for The Texas Tribune)

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LUFKIN — Few Texans understand the state’s complex property tax laws. So homeowners can be easily forgiven for wondering when and how promised tax cuts will show up in their wallets.

More than 80% of Texas voters in the November election approved more than $18 billion in property tax cuts.

Because the state doesn’t impose its own property taxes, it’s not as simple as it may sound. Voters actually approved a scheme in which local school districts must lower their tax rates with the promise that the state will make up the lost revenue. Voters, also prompted by state lawmakers, approved another amendment that increased the amount a person who lives in the home they own can protect from taxes, a mechanism known as the homestead exemption, and limit the amount property valuations can rise.

Madison McMullen, a first-time homeowner in Lufkin, knows the cuts will help her in the long run. She hopes to pay more toward her principal and cut down the time it takes to pay off her mortgage.

“I'm trying to figure everything out," she said. "I'm 25 years old and I don't really know what I'm doing. This is all very new to me."

McMullen began shopping for her first home in January 2022 after her rent kept increasing. As a single nurse, it was difficult to find a home in her price range — especially as interest rates have steadily increased. With help from a special program for nurses, her Realtor and a raise, she found her dream home: a three-bedroom, two-bathroom house.

“It was everything that I wanted,” she said.

A little remodeling was necessary. She installed gray laminate flooring, whitewashed her brick fireplace, and spruced up the place with a modern farmhouse vibe.

McMullen pays $1,700 a month toward her $180,000 mortgage. Only $131 a month covers the principal. The rest goes to interest, insurance, fees — and, of course, taxes. She hopes to save around $90 to $100 a month in property taxes.

When can she — and other homeowners — expect to see the savings? We asked local tax experts, including Bowie Central Chief Appraiser Mike Brower for details.

Who should see their property taxes drop and when? And how much will they be?

Homeowners who pay school property taxes either through a mortgage escrow or directly to their county’s tax assessor-collector will qualify for savings. (So will small businesses.)

Renters are not included in the mix as landlords are not required to pass along any savings.

Additionally, the homestead exemption only qualifies for properties serving as a primary residence. For those who own multiple properties, the homestead exemption will only apply to one property.

Taxes are determined by applying the rate set by the government to the appraised value of the home or other property. In Texarkana ISD, for example, the 2023 tax rate is $1.2113 per $100, meaning a $300,000 home would owe $3,633.90 in school property taxes. (That's in addition to other city, county and other service district taxes a homeowner might owe.) But even with lower rates, Brower warned that some homeowners will see their taxes plateau, or even increase. That’s because the value of their home grew at a faster rate than the tax cut.

Lt. Gov. Dan Patrick said homeowners with an “average priced home” could see a savings of $1,250-$1,450 annually. Zillow estimated the average Texas home value at $298,424 as of Oct. 31, 2023.

Brower estimated homeowners in Bowie County, which includes Texarkana, who bought in 2021 or 2022 will save around $250 to $300 per year.

Have taxing entities accounted for this already?

In years past, when the Legislature made big moves it provided no guidance on how entities ought to go about calculating taxes owed, Brower said. So it was up to each entity and, as a result, taxpayers saw different results. Some received bills based on current laws and some received bills based on future laws.

This year the Legislature encouraged the taxing offices to send bills based on the new laws, but those offices were still given a choice on how to proceed. Some entities waited until after the elections to send bills. Some sent bills as if the amendments passed. Some sent bills based on the laws at the time.

For those whose homes are paid off, there is a good chance the local taxing authorities accounted for the potential change when they sent property tax bills out in October, Brower said. Bowie County did, believing voters would approve the proposed changes to property tax laws.

Will the recent lawsuits challenging the election results delay the rollout?

A lawsuit filed by right-wing activists falsely claims the 2023 election was invalid because the state’s voting equipment is not certified and that voting machines are connected to the internet. The machines are, in fact, certified and none of the approved machines have the capacity to connect to the internet.

While the lawsuits are expected to be dismissed, it’s unclear when. Gov. Greg Abbott and Secretary of State Jane Nelson said in court documents last week that the lawsuits are invalid because of a technicality. A legal expert told The Dallas Morning News they believe a judge must still dismiss the cases — whether on merits or a technicality — before the tax cuts can be put in place.

How do I make sure I see these savings?

Homeowners can easily verify with their local appraisal district or the tax assessor-collector’s office.

Those paying taxes through an escrow account with their mortgage lenders must communicate with their lender. Companies should notice a surplus in the taxes paid and do one of two things: refund the money in check or roll the payments into the next year and recalculate the monthly payment, Brower said.

Every lender conducts an annual escrow analysis to determine how much in taxes the homeowners owe, said Angie Williams, the Realtor who helped McMullen buy her home. It typically causes monthly payments to increase, but this year Williams expects monthly payments will decrease.

If a homeowner doesn’t want to wait for the annual review, they can request their lenders to move faster, she said.

Will the tax cuts make home ownership more affordable?

Altogether, Williams sees the changes in property taxes as a positive. Fewer people will be priced out, she forecasted.

“For the average homeowner or for the majority of property owners and property searchers right now, it will make the decision of whether now is the time – if they can actually go ahead and move forward with a purchase at this point,” Williams said.

She sees this as an opportunity for those whose income could not handle the cost of taxes on top of home values to enter the market. While $80 to $100 a month may not seem like a lot to many people, it could make or break a buyer.

Correction, Dec. 12, 2023 at 10:32 a.m.: Due to an editing error, a previous version of this article misstated the amount of school property taxes a homeowner would pay at Texarkana ISD. A $300,000 home would owe $3,633.90 in school property taxes.