Sweeping Property Tax Cuts Gain Steam in Texas Legislature

Billions of dollars in property tax cuts are on the table in Texas.

Republican lawmakers in the Texas House and Senate reached a deal on sweeping legislation that could affect homeowners and businesses if approved in the coming weeks, the Texas Tribune reported.

One proposal would raise the state’s homestead exemption from $100,000 to $140,000, reducing the taxable value of owner-occupied homes. Another would boost that exemption to $200,000 for seniors and Texans with disabilities. A homeowner with a $302,000 property assessment could see more than $500 in savings on their school tax bill, lawmakers have said.

The proposals, backed by Sen. Paul Bettencourt, a Republican from Houston, and Rep. Morgan Meyer, a Republican from Dallas, also include a $125,000 exemption on business personal property, the taxes on inventory held by small and mid-sized businesses across the state. The cut would be a 4,900 percent jump from the current $2,500 cap.

The tax cut plan is expected to cost upwards of $51 billion over two years.

It includes $3 billion in state funds to help school districts offset lower revenues from the exemption increase, known as “compression.” But local governments, including cities and counties, may still need to raise tax rates to make up for the reduced base, potentially offsetting some of the relief.

Budget watchdogs and some Republican lawmakers have raised concerns about sustainability. With inflation and enrollment growth pressuring school funding, critics argue that locking in permanent exemptions could create long-term budget holes. Renters, who make up 4.2 million Texas households, would not see direct benefits from the cuts.

If passed, the Texas plan would mirror efforts in other GOP-led states to cut property taxes amid rising home values.

Florida, Georgia and Iowa have pursued similar strategies, while California and Colorado are exploring different approaches to easing the tax burden on homeowners, such as annual increase caps.