Senate approves $140K homestead exemption to increase property tax relief

Yahoo

13-02-2025

AUSTIN (Nexstar) — Texas Senators voted unanimously to increase the homestead exemption to a record amount for homeowners, but during the debate some lawmakers brought up concerns about local taxing entities offsetting the savings created by the state government.
The exemption would allow homeowners to deduct $140,000 off the appraised value of their home that is ultimately taxed by school districts. For senior and disabled homeowners the exemption would be raised to $150,000.
The tax exemption, along with a compression element on the average school district tax rate built inside Senate Bill 1, the Senate budget proposal, will combine to provide an estimated $496.57 in tax relief to average homeowners, according to Sen. Paul Bettencourt, R-Houston, the author of the bill.
'Today, the Texas Senate delivered a win for homeowners statewide. By passing SB 4 and SJR2, we are putting real dollars back into the pockets of Texans while ensuring our schools remainfully funded,' Sen. Bettencourt said in a press release following the vote.
In his opening remarks on the Senate floor, Sen. Bettencourt said his bill would allow between 80 and 90% of Texas seniors to pay $0 on local school district taxes, which is just a portion of your property tax bill. In fact, the Houston Senator pointed out 49% of the school districts in Texas have an average home value of below $140,000, which means an average homeowner in those districts would also pay nothing on school taxes.
Bettencourt said this bill makes sure the state will pay back the school districts for any loss in revenue because of the exemption increase.
Just before noon, Sen. Lois Kolkhorst, R-Brenham, rose to question Bettencourt about his bill. She started with her approval of raising the homestead exemption, saying, 'We're going to do something great today.'
But she says now is not the time to celebrate and feels more tax reform needs to happen this year to help keep money in Texas taxpayers' pockets. She spoke about her constituents, who tell her the tax breaks the state is providing are providing relief for a year, but then they do not see that relief the year after because other local taxing entities, like cities, counties, and community colleges, raise their taxes.
'We must battle every day to leave the money in the pockets of the people because we spend it better than we do,' Kolkhorst said. She said she looks forward to working with Sen. Bettencourt on a package of bills that will restore faith in taxpayers to believe when tax cuts happen they will truly lower property taxes.
'Is this the beginning of lots of reforms in the 89th session that will result in our homeowners and our small businesses feeling the real benefit of a, once again historic surplus, going back to them?' Kolkhorst questioned.
Sen. Bettencourt responded saying he had additional bills coming, but said this current bill is not an omnibus bill. 'This is the best tool, the best thing I can do as a tax writer, to get people that result,' Bettencourt said.
After Sen. Kolkhorst finished her questioning, Lt. Gov. Dan Patrick addressed her saying, 'I am going to celebrate this bill today. I'm going to shout it from the rooftops because it is a great bill.' The lieutenant governor pointed out that although appraised values go up, local taxing entities can not have their revenue exceed 3.5% from the year before, meaning tax rates must go down too. However, a taxing entity can increase it's revenue over that 3.5% but it must be approved by a majority of voters in an election.
Sen. Joan Huffman, R-Houston, also spoke during the debate. She read off data from the Texas Comptroller comparing the taxing rate differences from different taxing entities across the state from 2022 to 2023.
The data shows the schools take up about 48.5% of the total tax levies and they did go down by 10.31% in that one year. But she says total tax levies from cities went up 10.38%, counties went up 10.76%, and special districts went up 22.23%.
'I think it's critically important that we try to get a handle on what's going on at the local level,' Sen. Huffman said.
Governor Greg Abbott raised similar concerns during his State of the State address. He is insupport of requiring a supermajority, or two-thirds, of voters to approve a tax rate increaseor bond election.
The lieutenant governor mentioned those comments during the meeting and said, 'Ifit's an emergency item we'll pass that before March 17.'
It is now up to the House of Representatives to pass its version of property tax relief. If that happens and the governor signs off on the bill, then Texas voters will have the final approval to raise the homestead exemption at the ballot.
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