Freedom

Story by Alex Driggars, Austin American-Statesman

Senior Texans and those with disabilities could see big savings on their property tax bill next year if a Senate proposal passed Wednesday becomes law and gains voter approval.

Senate Bill 23 would nearly double the homestead exemption on school district property taxes for homeowners who have a disability or are 65 and older. The bill, which the Senate passed by a 30-1 vote Wednesday, would increase the portion of a home’s value that is exempt from annual taxes from $110,000 to $200,000.

In other words, senior Texas homeowners and those with disabilities whose homes are appraised at $200,000 or less would not pay any school operations taxes under the proposal.

Texas voters would need to approve a related constitutional amendment, Senate Joint Resolution 85, for the increased homestead exemption to take effect.

Houston Republican state Sen. Paul Bettencourt, the bill’s author, said a majority of senior and disabled homeowners could see a $950 property tax reduction per year, on average, when factoring in SB 23 and other proposals expected to pass this session.

“We’re currently estimating that 45% of those homeowners (are paying) zero taxes to their specific school, and this bill in combination with the existing homestead exemption will push that well up into a supermajority,” Bettencourt said.

Under the bill, school districts would get additional state money to cover the difference in tax revenue. The proposal is expected to cost the state $1.2 billion over the next two years.

The new proposal comes after senators earlier this session passed an increase to the homestead exemption for all homeowners. Senate Bill 4, also by Bettencourt, would boost the exemption from $100,000 to $140,000 if authorized by voters. That bill has not yet received a committee hearing in the House.

A separate $3 billion provision in the Senate’s budget bill, SB 1, would compress or “buy down” school districts’ tax rates, potentially providing additional tax cuts to homeowners.

Under those proposed cuts, all homeowners in the state could see around $500 in savings on average, the American-Statesman previously reported.

The proposed tax cuts build on a number of previous increases to the homestead exemption. Texas voters in 2015 raised it from $15,000 to $25,000, then again to $40,000 in 2022.

During the second special session in 2023, a bipartisan majority of lawmakers passed SB 2 and SB 3 to raise the homestead exemption from $40,000 to $100,000 amid a historic state budget surplus. Voters approved the $18 billion property tax cut with 83% support.

Much of Texas’ tax law, including the homestead exemption, is enshrined in the state Constitution. Changes to the Texas Constitution require approval from two-thirds of both chambers of the Legislature and a majority of the state’s electorate.