Another big tax cut for Texas homeowners appears imminent

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Texas homeowners are one step closer to a bigger tax break after the Texas House gave unanimous final approval to a set of legislative proposals Wednesday.

House members approved bills aimed at giving homeowners relief on the property taxes they pay toward school districts, the biggest chunk of a property owner’s tax bill. Senate Bill 4 by state Sen. Paul Bettencourt, a Houston Republican, would change the state’s homestead exemption, which reduces how much of a home’s value can be taxed to pay for public schools, from $100,000 to $140,000.

Senate Bill 23, another Bettencourt proposal, would raise a separate homestead exemption for homeowners who are older or have disabilities from $10,000 to $60,000.

The Senate must sign off on changes the House made to the bills — key priorities for Lt. Gov. Dan Patrick, who leads the Texas Senate — before they head to Gov. Greg Abbott’s desk.

Providing bigger tax breaks to homeowners is a key component of a deal brokered by Republicans in the Texas Legislature to lower tax bills for Texans, who pay among the highest property taxes in the country. The other major piece is giving business owners greater exemptions on their inventory. Texas is one of the few states that taxes businesses’ inventory.

House Bill 9 by state Rep. Morgan Meyer, R-University Park, would exempt up to $125,000 of businesses’ inventory from being taxed by school districts, cities, counties or any other taxing entity. Under current law, businesses don’t have to pay taxes on that property if it’s worth $2,500 or less.

The Texas Senate approved that bill last week, and House members gave a thumbs-up Monday to changes that chamber made.

House lawmakers shot down a push by the chamber’s more conservative members to boost the homestead exemption to $160,000. Supporters of the failed amendment argued that legislators could further tap the state’s $24 billion surplus to pay for greater relief. But other lawmakers stressed that state budget writers have only set aside enough money to pay to raise the exemption to $140,000.

The owner of a home valued at $302,000 — about the typical Texas home value last year, according to Zillow — would have saved more than $500 on their 2024 school taxes had the $140,000 exemption been in place that year, according to a Tribune calculation. That’s when the exemption is combined with $3 billion in cuts to school tax rates proposed in the state’s upcoming two-year budget.

Texas lawmakers plan to spend $51 billion on cutting property taxes over the next two years. State budget watchers and some lawmakers, including Republicans, worry that the state won’t be able to afford tax cuts in the long term.

Voters in November will have the final say on whether the tax relief takes effect. The changes must be approved by voters because they each involve amending the Texas Constitution.

Lawmakers appear on track to pass their major property tax legislation before they leave Austin in June. That’s a marked difference from two years ago, when House and Senate leaders couldn’t come to terms on a tax-cut deal before the clock ran out, forcing Abbott to call two special sessions to come to terms.

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