From the cover
State’s $18B plan to trim Cy-Fair property tax bills
What else?
What you need to know
If Proposition 4 passes, the homestead exemp- tion will be raised, and homeowners will pay reduced taxes to their local school districts . • ISD tax rates will decrease by 10.7 cents. • The state will distribute $12.7 billion to schools. • For a $300,000 home, decreasing the school dis- trict tax rate by 10.7 cents would cut an average tax bill by $321. The plan also includes a nonhomestead appraisal cap , which would limit annual value increases for certain properties if Proposition 4 passes. • The value of property worth $5 million or less cannot increase by more than 20% year over year. • This applies to all nonhomestead property, such as second homes and commercial property. • Approximately 13 million properties will qualify. As part of the new law, SB 3 also amends the state business franchise tax , which all businesses currently pay based on individual circumstances. • Businesses that make less than $2.47 million annually will no longer have to pay the tax. • Roughly 67,000 small and midsize businesses will be exempt from the tax. • Collectively, qualifying business owners will save around $300,000 each year. While lawmakers widely supported the legis- lation, some in opposition fought for relief for renters . State Sen. Paul Bettencourt, RHouston, argued that landlords who receive tax relief would pass the savings on to renters, but Dick Lavine, a senior scal analyst for the progressive advocacy group Every Texan, said the legislation does “nothing for [renters] at all.”
news release after signing o on the plan. The $18 billion package includes two bills— Senate Bills 2 and 3—and a constitutional amendment. For the tax cuts to show up on this year’s tax bill, Texans must approve the constitutional amendment, Proposition 4, in November. Homeowners would also need to apply to receive the homestead exemption. This tax relief comes after back-to-back years of what Harris Central Appraisal District ocials called “unprecedented” property value increases. The average homeowner saw 23.3% and 17.3% market value increases in 2022 and 2023 , respectively, following 8.9% and 10.4% increases in 2020 and 2021, respectively.
Despite entities such as Cy-Fair ISD lowering property tax rates in recent years, property appraisal increases have resulted in higher tax bills for local homeowners. State legislators approved a plan to address property tax increases in mid-July, closing out the second special session of the year. “If passed by voters this fall, Texas homestead exemptions [for school district taxes] will rise to $100,000, senior homeowners will be protected from being priced out of their home, the small-business exemption for the franchise tax will double and Texas small businesses will be protected from excessive appraisal increases,” Gov. Greg Abbott said in an Aug. 9
Calculating tax bills
Taxable value The value of a property that can be taxed
Local tax rate Includes school district, county, utility district, etc.
Property tax bill
Current taxable value
Tax exemption (Value that cannot be taxed)
Average home value in Texas
Taxable value
New taxable value (pending voter approval) $331,000 $40,000
$291,000
Tax exemption (Value that cannot be taxed)
Average home value in Texas
Taxable value
$331,000
$100,000
$231,000
SOURCES: TEXAS COMPTROLLER OF PUBLIC ACCOUNTS, TEXAS LEGISLATURE ONLINE COMMUNITY IMPACT
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