State
BY HANNAH NORTON
On the heels of what proponents have called “historic” property tax relief, some Texas lawmakers are questioning whether the state can a ord to continue increasing the tax exemptions passed during the 2023 and 2025 legislative sessions. Texas homeowners are taxed by local government entities, not the state; however, lawmakers can require certain tax exemptions and limit annual local tax increases. When the state creates or expands tax exemptions, it is often constitutionally required to send money to school districts to ensure they do not lose revenue as a result of the lower taxes. Texas is spending $51 billion on property tax relief in scal years 2025-26 and 2026-27. Unless the Legislature rolls back existing tax exemptions, the state will be required to spend that much or more on tax relief every biennium, lawmakers said. Lawmakers question tax break funding
Breaking it down
adding that “the money is not still coming in.” “I do have a lot of concerns about how are we going to pay for this going forward?” she said.
Texas saw large budget surpluses due to federal COVID-19 funding and high sales tax revenues, Rep. Donna Howard, D Austin, said Nov. 20,
How Texas spends its money Texas lawmakers dedicated $51 billion, or 15% of the $338 billion biennial state budget, to property tax relief.
Money allocated
Percentage of total
Fiscal years 2025-26 and 2026-27
Budget item
Agencies of education
$134.7B $105.7B $48.5B $19.8B
39.8% 31.3% 14.3% 5.8%
1
Health and human services
2
Business and economic development Public safety and criminal justice
3
4
General government Natural resources
$11.9B $8.1B $6.7B $1.2B $0.5B
3.5% 2.4%
5 6 7 8 9
2%
7 8 9
Regulatory
2%
0.4%
Judiciary
0.4% 0.2%
0.2%
Legislature
NOTE: NUMBERS MAY NOT TOTAL 100% DUE TO ROUNDING.
SOURCE: TEXAS LEGISLATIVE BUDGET BOARD COMMUNITY IMPACT
The debate
“We’re kind of maxed out at what we can do for property tax reform, from a budget perspective.” SEN. CHARLES PERRY, R LUBBOCK
homeowners and lowering the age at which Texans qualify for additional tax relief. Patrick said his plan would cost about $4 billion, while Abbott had not released a cost estimate as of press time. Abbott and Patrick’s seats are up for election in 2026, alongside about half of the Texas Senate and the full Texas House.
Multiple plans to further expand tax relief are in the works ahead of Texas’ 2027 legislative session. Abbott proposed a six-part plan to limit local government spending, make it harder for tax hikes to pass in local elections and ask Texans to vote to eliminate school property taxes. Lt. Gov. Dan Patrick suggested continuing raising tax breaks for
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