Texas Senate Committee Approves Property Tax Cut Proposal, Increasing Homestead Exemption to $140,000

A Texas Senate committee has unanimously approved a proposal to increase the state's homestead exemption to $140,000, a move aimed at providing property tax relief to homeowners. Senate Bill 4 and Senate Joint Resolution 2, which propose amending the Texas Constitution to allow for the higher exemption, are a priority for Lt. Gov. Dan Patrick. The current exemption is $100,000, which was approved by voters in 2023. State Sen. Paul Bettencourt stated that the new homestead exemption would save homeowners an average of $363 per year. The Legislative Budget Board estimates that boosting the exemption would cost the state $7.7 billion by 2030. Lawmakers also plan to allocate an additional $3 billion to school districts over the next two years to reduce their tax rates. Combined, these cuts would have saved a homeowner paying the average school district tax rate about $528 on their taxes last year, had they been in effect. Texas relies heavily on property taxes due to the absence of a state income tax. While homeowners may see relief, the state's 4.2 million renter households won't directly benefit from the homestead exemption, though some believe landlords will pass along benefits from tax cuts to renters to stay competitive. Bill supporters argue that boosting the homestead exemption would lower costs for existing homeowners and lower the barrier to homeownership for Texans. However, a recent study suggests that greater tax breaks may contribute to higher home prices by reducing the number of homes on the market. The Senate has also set aside $500 million for tax cuts for businesses. The Texas House has not yet begun moving on property tax legislation.