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The Texas Senate on Thursday quickly and unanimously advanced a proposal to provide billions of dollars in tax breaks to homeowners in a bid to blunt the state’s high property tax bills.
Senate Bill 4, that chamber’s marquee property tax-cut proposal, would set the state’s homestead exemption on school district taxes at $140,000 of value, which is the amount exempted from being taxed to pay for public schools. The current exemption sits at $100,000.
Senators approved the bill by a 30-0 vote, two days after the chamber’s Local Government Committee unanimously approved the bill. The bill now goes to the Texas House.
Voters would have the final say in whether to give themselves a tax cut. Adjusting the homestead exemption requires voters to approve an amendment to the Texas Constitution.
The bill would result in substantial tax decreases for homeowners, said state Sen. Paul Bettencourt, a Houston Republican who authored the bill. In nearly half of the state’s school districts, the average value of a home sits below $140,000, Bettencourt said. That means the average homeowner will effectively pay no property taxes toward public schools. At least 80% of Texans age 65 and up would be exempt from those taxes if the exemption takes effect, Bettencourt said, citing estimates from the Texas Silver-Haired Legislature, a nonprofit that advocates for elder Texans.
“There's no lower number than zero,” Bettencourt said. “It's the best number a tax bill can ever get for payers.”
Texas lawmakers this year have once more vowed to tackle the state’s high property taxes, intending to bring relief for homeowners and businesses. Gov. Greg Abbott designated property tax cuts an “emergency item,” enabling lawmakers to quickly pass legislation — and called on them to spend billions to continue cutting property taxes.
Senate budget writers have set aside $3 billion to increase the homestead exemption in the state’s upcoming two-year budget. Boosting the exemption would cost the state $7.7 billion by 2030, according to an estimate from the Legislative Budget Board.
Legislators also expect to send an additional $3 billion to school districts over the next two years so they can bring down their tax rates — a cost lawmakers committed to in previous sessions.
Combined, those cuts would have saved a homeowner paying the average school district tax rate about $528 on their taxes last year had those measures been in effect, a Texas Tribune calculation shows.
Texans pay among the highest property taxes in the country, according to the Tax Foundation. Those bills are high because the state doesn’t have an income tax and leans heavily on property taxes to pay for public schools, police officers, firefighters and streets among other public services. The median Texas homeowner’s tax bill rose nearly 30% from 2010 to 2023, U.S. Census Bureau data show — nearly three times as fast as the country as a whole.
For the past several years, Republican state lawmakers have pushed to rein in rising property tax bills. That push culminated in 2023 with $12.7 billion in new tax cuts, including a boost to the state’s homestead exemption and billions of dollars for school districts to reduce how much they collect in property taxes.
Homeowners across the state appeared to see relief from that legislation combined with other moves enacted since 2019, a Texas Tribune analysis of homeowners’ tax bills found.
The amount of money school districts collected from property taxes grew in 2024 after those revenues fell the previous year, estimates from the Texas Comptroller’s office show. The average homeowner’s tax bill in Travis, Harris and Dallas counties also grew, according to a Tribune estimate using local appraisal and tax rate data — in part owing to growth in property values. Some localities in Travis and Harris counties also raised their tax rates. But bills in those counties remained at or below where they stood before the COVID-19 pandemic.
Nonetheless, some lawmakers voiced frustration that taxpayers aren’t feeling relief — despite the billions of dollars the Legislature has spent on tax cuts. There’s “a lack of trust that when we say we've given them a tax cut, that they really believe that it is a tax cut,” said state Sen. Lois Kolkhorst, R-Brenham, who ultimately voted in favor of the bill.
“Don't take a victory lap today, because our work is really just beginning,” Kolkhorst said.
Property tax bills would be even higher if not for moves by the Legislature since 2019 to rein in the state’s high property taxes, tax-cut advocates have argued. Texas is slated to spend at least $51 billion on tax cuts, including property tax cuts, in the state’s upcoming two-year budget.
“Senator, I am going to celebrate this bill today,” said Lt. Gov. Dan Patrick said, addressing Kolkhorst. “I'm going to shout it from the rooftops because it is a great bill.”
Lawmakers will likely take up other measures to rein in property taxes this year, lawmakers noted. Patrick noted that Abbott has called on legislators to require localities including cities, counties and school districts to go to the voters if they want to raise their tax rates.
Legislators have drawn on large budget surpluses to fund property tax cuts. Some senators warned Texas won’t always enjoy those surpluses, jeopardizing those cuts and potentially leaving schools on the hook.
The state’s 4.2 million renter households won’t directly benefit from an increase in the homestead exemption because rental property owners aren’t eligible for homestead exemptions. Tenants pay property taxes via their rent, but Texas doesn’t provide direct tax relief to them as it does homeowners.
Responding to a question from state Sen. José Menéndez, a San Antonio Democrat, Bettencourt said renters will benefit from the $3 billion lawmakers plan to use to cut school tax rates because landlords will pass along benefits from tax cuts to renters to stay competitive. Rent growth has slowed considerably in the state’s major metropolitan areas — and in the Austin region, rents have fallen for nearly two years.
Bill supporters said boosting the homestead exemption would lower costs for existing homeowners who are facing increased housing costs not just from taxes, but on items such as homeowners insurance. They said increasing the exemption would also lower the barrier to homeownership for Texans who may otherwise have a hard time getting a leg up in the current market. That could mean first-time homebuyers or long-time homeowners who may want to move, said Dixon Holman, an Arlington real estate agent who sits on the board of Texas Realtors.
“It’s not a panacea but it certainly makes a difference,” Holman told lawmakers during Tuesday’s committee hearing.
But greater tax breaks may actually contribute to higher home prices, a recent study from New York University and University of Hamburg suggests. Researchers found that homeowners are less likely to move if they get a bigger tax benefit. That leads to fewer homes on the market, which drives up prices as competition increases over a limited supply of homes. Texas has more homes on the market than it did during the COVID-19 pandemic, but still faces a steep shortage.
Senate lawmakers have set aside another $500 million to fund tax cuts for businesses. It’s not clear yet how exactly those will work because the accompanying legislation has not been filed.
It’s also not yet clear how the Texas House intends to pursue property tax cuts this year. Newly elected House Speaker Dustin Burrows, R-Lubbock, hasn’t yet assigned representatives to committees, so legislation has not yet started moving in that chamber.
