AUSTIN — Texas homeowners and businesses will see thousands off their property taxes in the coming years after voters on Tuesday overwhelmingly approved a constitutional amendment that would change how public schools are funded. There is a possibility that the dollar amount will be reduced.
“The fight for property tax reform is one that Lt. Gov. Dan Patrick and I have worked on together for nearly 20 years,” Houston Republican Sen. Paul Bettencourt, the bill's author, said in an emailed statement. It is something that has been done.” “It’s great to see your hard work paying off and people finally getting the property tax breaks they’ve wanted and deserved for years. That’s wonderful.”
Proposition 4, an $18 billion property tax cut, was approved by 84% of voters in Tuesday's constitutional amendment election, according to Decision Desk Headquarters. Approximately 1.1 million people voted in favor of the amendment, with 89% of the estimated votes counted.
The proposal is directly aimed at lowering school district property taxes, which make up the bulk of Texas landowners' property taxes.
Under the proposal, school districts would get $7.1 billion to lower their tax rates by replacing local revenue they would have collected with state funds, a move lawmakers called “compression.” This would reduce the tax rate that school districts pay on operating expenses such as teacher salaries by 10.7 cents per $100 of property value.
The proposal would also more than double homeowners' exemption from school district taxes, which is the value of a home that cannot be taxed to pay for public school tuition. The constitutional amendment increases the exemption amount from $40,000 to $100,000.
Together, these tax breaks applied to a landlord's 2023 tax bill will result in more than $2,500 in tax savings over the next two years for the typical Texas homeowner, and even greater savings for seniors. Mr. Bettencourt, a Houston-area Republican and the Senate's chief tax cut proponent, would receive , according to figures provided by officials. That comes out to just over $100 a month.
Despite Texas' reputation as a low-tax state, largely due to its lack of a state income tax, landowners in Texas pay some of the highest property taxes in the nation, according to the conservative Tax Foundation. Cutting property taxes has become a top priority for the state's top Republicans.
This year, Republicans have an opportunity to make a big push toward tax cuts, with a sizable portion of Texas' record $33 billion state budget surplus resulting from strong economic growth and excessive federal coronavirus relief funds. I promised to use it. . After months of infighting, Republican lawmakers presented Gov. Greg Abbott with an $18 billion tax cut, but voters still had to approve it at the ballot box.
The package also includes $5.3 billion in tax cuts approved by lawmakers over the past few years.
Voters approved other tax changes as part of Proposition 4, including a new cap on the amount by which the value of certain businesses' assets can increase each year to help determine owners' tax liability.
Owners of commercial, mineral, and residential properties (such as rental homes and apartment buildings) that do not have a homestead exemption and have an assessed value of less than $5 million will receive annual value increases for the next three years. will be subject to a 20% cap. . Previously, unlike homeowners, whose taxable home values could not rise by more than 10% per year under state law, businesses had no such cap.
Caps on the value of certain commercial properties will expire in 2026 unless lawmakers and voters choose to continue them.
Proposition 4 also expands the class of businesses that don't have to pay state franchise taxes. The amendment would allow voters in counties with at least 75,000 residents to elect and appoint three new members to their local assessment district boards.
This article originally appeared in the Texas Tribune. The Texas Tribune is a member-supported, nonpartisan newsroom that informs and engages Texans about Texas politics and policy. For more information, visit texastribune.org.
