AUSTIN, Texas — On Saturday, Gov. Greg Abbott officially signed two Texas property tax relief bills into law.
The bills, Senate Bill 2 and Senate Bill 3, were passed this month in a second special legislative session following a long impasse between the Texas Senate and House.
The deal’s money is coming from the State's $34 billion budget surplus.
Under the legislation, the State would send money to school districts throughout Texas to help lower tax rates. It also raises the homestead exemption from $40,000 to $100,000, so long as voters give it the green light.
The $18 billion tax cut plan includes:
- Over $12 billion to be spent on reducing the school property tax rate for all homeowners and business properties by 10.7 cents
- Increase homestead exemption for homeowners from $40,000 to $100,000
- A 20% circuit breaker on appraised values as a three-year pilot project for non-homesteaded properties, valued at $5 million and under, including residential and commercial properties
- Savings on the franchise tax for small businesses and the creation of newly elected positions on local appraisal boards. It would increase the franchise tax exemption from $1 million to $2.47 million
- The resolution would create a three-year pilot program for all other property valued at $5 million or less, to cap increases on appraisal values
“We’re giving back the people’s money, so we need the people to say yes," State Sen. Paul Bettencourt (R-Houston) said.
Bettencourt authored the bills. He said the average homeowner will save nearly $1,400 per year and nearly $1,500 for seniors.
“Not only do they get a whopping 44% reduction in their tax bill like that this year, they’re going to see that tax reduction continue every year after that. So, it’s a great thing for over-65 taxpayers," Bettencourt said.
Additionally, around 67,000 more small businesses will be exempt from franchise taxes. There's also a temporary 20% cap on appraisal increases for non-homestead properties that are valued at $5 million or lower.
“That’s for everyone who might have a second house where there’s no cap at all, or they have rental property, rental homes that they rent out, or they have business property that goes up more than 20% in a given year," Lt. Gov. Dan Patrick said.
Texas voters will still need to give final approval to these tax cuts on the ballot in November. If approved, Texans would see the benefits on their 2023 taxes.
KHOU contributed to this report.