Texas lawmakers reach property tax agreement
The Texas House and Senate on Monday reached a deal on proposed legislation that will deliver the largest property tax cut in state history, according to a joint statement issued by Lt. Gov. Dan Patrick and Speaker Dad Phelan.
“I'm thrilled to be able to vote to provide Texans with the largest state property tax cut in American history,” said Rep. David Spiller, who represents Olney. “I appreciate the hard work of leadership of both chambers to achieve this result.”
Highlights of the $18 billion tax relief legislation include: Over $12 billion will be spent on reducing the school property tax rate for all homeowners and business properties.
Every homeowner who homesteads their home - approximately 5.7 million homeowners - will get a $100,000 homestead exemption.
Non-homesteaded properties valued at $5 million and under, including residential and commercial properties, will get a 20 percent “circuit breaker” on appraised values as a three-year pilot project. A property tax circuit breaker reduces property taxes that exceed a certain percentage of someone’s income.
The legislation also will include savings on the franchise tax for small businesses and create newly elected positions on local appraisal boards. The Legislature is expected to pass the package of bills that lower property and franchise taxes later this week, the statement said. Lawmakers must pass the legislation by Aug. 9 in order to place a constitutional amendment needed to raise the exemption on the November ballot, Sen. Drew Springer, who represents Olney, said.
Sen. Springer called the compromise “a good deal.”
“We had a big surplus and we wanted to give some of it back to the Texans who paid it.”
“With the $100,000 increase in the homestead exemption, the average homeowner in Olney will see a 41 percent reduction on school property taxes,” he said. “The good news is, the schools aren’t losing any money. The state is making it up. It won’t affect the schools at all.”
The average homeowner will see their property taxes drop by $500 to $600 in 2024, provided that voters approve the higher exemption on the November ballot, he said.
Disabled homeowners and those over 65 will see an even larger reduction, as the new legislation caps the dollar amount that seniors will pay on the school maintenance and operations tax, he said. “2023 will really be the high-water mark on what seniors will pay,” he said.
Small businesses and owners of second homes or ranches valued under $5 million will see a cap of 20 percent on rises in their property taxes under the “circuit breaker” provision of the bill, he said.
Lawmakers also doubled the exemption for franchise taxes, ruling that small businesses that make less that $2.5 million don’t have to pay the taxes or even file the franchise tax form, he said.