Texas Homeowners Get Major Boost Over Property Taxes

Homeowners in Texas may be eligible for significant property tax savings this year under new regulations that came into effect on January 1.

Newsweek contacted Texas Governor Greg Abbott's office for comment on Thursday outside standard working hours.

Why It Matters

While Texas has no state property tax, homeowners pay property taxes to local authorities, who use the revenues to fund crucial services—such as schools, streets and roads, water systems, police, and firefighters. According to the financial tech company SmartAsset, Texas homeowners pay the seventh-highest property taxes in the nation.

The average effective property tax rate in the Lone Star State, SmartAsset said on its website, is 1.60 percent—significantly higher than the national average of 0.99 percent. Annually, the typical homeowner in the state pays $3,797 in property taxes, the company added.

A worker renovating a newly constructed home in Austin, Texas, on March 19, 2024. On January 1, a regulation capping how much the appraised value of some Texas homes can increase every year came into... Brandon Bell/Getty Images

What To Know

Tax payments in Texas are based on the market value of a property, which is determined every year by county appraisal districts. Appraisals are usually done at the beginning of the year, while tax bills are sent out from October 1 onward and are due by January 31 of the following year.

Homeowners living in school districts can receive relief on their property taxes thanks to homestead exemptions, which are valid for homeowners in their primary residence.

Under Senate Bill 2—also known as the Property Tax Relief Act, which was approved by Texas lawmakers during the 2023 legislative session—the homestead exemption has increased from $40,000 to $100,000. That amount rises to $110,000 for homeowners in the state over the age of 65.

On top of that, the state's new "circuit breaker," which came into effect on January 1, now puts a 20 percent taxable value cap on all non-homestead properties judged to be worth $5 million or less in 2023. The Texas comptroller's office previously said that if the circuit breaker had been applied to the 2023 tax year, it would have benefited 84.1 percent of all multifamily properties in the state, as reported by the Institute for Professionals in Taxation.

If the property is later sold, the new owner does not keep the capped value, which must be redetermined.

Texas' Republican governor and GOP-led legislature have approved several increases to homestead exemptions in the past few years. However, in 2023, as Abbott celebrated the passing of SB2, residents complained that the new regulations would do little to help them face skyrocketing district appraisals. The new circuit breaker limits are designed to help address this issue.

What People Are Saying

Texas Governor Greg Abbott said in August 2023 after signing SB2 into law: "Today, I am signing a law that will ensure more than $18 billion in property tax cuts—the largest property tax cut in Texas history … Texas homestead exemptions will rise to $100,000, senior homeowners will be protected from being priced out of their home."

What Happens Next

While the new regulations offering property tax relief may benefit homeowners, local public schools have expressed concerns, as they rely on this type of taxation for funding.

According to the Tax Foundation, a think tank in Washington, D.C., schools that may lose out on property taxes can request additional state funding if they report a budget shortfall.

Are you a Texas homeowner? We'd like to know what you think about the new circuit breaker limits and whether they go far enough to help homeowners in the state. Contact g.carbonaro@newsweek.com.