AUSTIN, Texas — A deal on property tax relief is still up in the air at the Texas State Capitol, but it's looking likely that lawmakers will agree to the $18 billion plan.
The plan includes reducing school tax rates, increasing homestead and franchise exemptions and creating temporary appraisal caps. It's expected that the Texas Senate will pass the plan on Wednesday, with the House set to take it up on Thursday.
We know there are a lot of questions about the plan and what happens next, so we're taking the time to answer them.
Q: What does the homestead exemption mean?
A: A general residential homestead exemption is available to taxpayers who own and reside at a property as of Jan. 1 of the year. It must be their primary residence.
A homestead exemption removes part of the value of your property from taxation and lowers your taxes.
Q: Will it be on your 2024 taxes?
A: If the plan passes and voters approve it, yes. The bill says it will take effect for the 2023 tax year, so you will see the changes reflected on your next tax bill.
Q: What does the property tax agreement mean for renters?
A:It does not directly affect renters. However, during a committee hearing on Tuesday, some lawmaker said they believe property owners would pass the benefits down to renters.
Q: My property has a remaining value of less than $100,000. With the new tax exemption, does it mean I would no longer pay taxes on my property?
A: Remember: exemptions don't apply to how much you have left to pay on a mortgage. They apply to the taxable value of your home, which is determined by your property appraisal.
So, for example, if your home is valued at $200,000 and this plan becomes law, you would only pay school taxes on $100,000.
Q: Public schools are funded by property tax revenue, so how will they be funded if this new relief bill passes?
A: There is a "hold harmless" clause in the bill to ensure that school get the same amount of money. So, the State would make up the difference on what schools would have gotten in property tax revenue.
Q: It seems too good to be true. Is there something hidden in the tax relief bill that would keep homeowners from voting for it?
A: Yes, this seems like a very good deal because it is a good deal for your average homeowner. But remember: voters will have to approve it, and Texas has a low voter turnout rate, especially in non-presidential election years. If voters don't approve the constitutional amendment tied to this in November, it won't happen.
But the last time we had property tax relief items on a ballot, in November 2021, both of them passed by wide margins, with 87% and 88% support, respectively.
Q: With my current homestead exemption increased from $40k to $100k under the new bill, will my property tax increase still be capped at 10% each year as it has been in the past, or will I be subject to the 20% cap that applies to properties valued at less than $5 million?
A: The answer is yes – the taxable value of your home can only go up by 10% year-over-year. The 20% cap only applies to all other property that are valued at less than $5 million, so rental properties, small businesses or other parcels of land would be subject to the 20% cap.
Q: Did the tax relief bill include the additional $20,000 homestead exemption for seniors?
A: Seniors won't directly get additional savings, but because they already get an additional $10,000 in homestead exemption, they will see a $110,000 exemption if this passes.
Q: When will the amendment election be held?
A: Election Day for this fall is Tuesday, Nov. 7.
Q: If the tax bill passes, when will it go into effect?
A: Once Gov. Abbott signs the legislation, it will then appear on the Nov. 7 ballot. If voters approve the plan, the savings will appear in their 2024 tax bills.
Q: If a senior's homestead tax has been frozen for several years, will the new tax bill reduce the taxes?
A: Yes, but when homeowners reach 65-years-old, the amount of school district taxes they pay will hit a ceiling. They won't pay more than that amount, but could pay less.
Q: Why do voters have to approve the increase in the homestead exemption? Is there something in the state constitution that requires this?
A: Article 8 of the Texas Constitution stipulates that the Legislature can exempt taxes, and voters are the only ones who can approve any change since it's in the constitution.
Q: If the property tax bill passes will it be for next year, or will it be applied retroactively?
A: Once Gov. Abbott signs the legislation, it will appear on the Nov. 7 ballot. If voters approve the plan, it will be reflected in your 2024 tax bill.
Q: Did the teacher raises get added to the property tax relief plan?
A: No. Even after a late push from Democrats to include teacher raises to the plan, it was not added. Republican leaders said they want to keep teacher pay a separate issue, and Gov. Abbott has indicated that he intends to call a special session in the fall to focus on teacher pay.
Q: How does the assessed value cap proposed work?
A: The assessed value cap is the pilot program attached to the legislation. It would create 20% appraisal caps for properties that are *not* homesteads or primary residencies as long as they have a value of $5 million or less.
Q: Which part of the property tax relief bill requires voter approval?
A: The increased homestead exemption, the pilot program to cap the taxable amount for properties and the three new appraisal board members will require voter approval. Each option will be included in a single ballot option in the November election.
Q: How long is the $18 billion in the plan expected to cover school districts, and what happens once it runs out?
A: The $18 billion is coming out of the budget surplus the state has for the next two years, so that money only last two years. Once the homestead exemption is increased, it won't go away, since it would be in the Texas Constitution upon voter approval. The Legislature would have to budget for it in the future. The state should theoretically continue to be able to make up the difference.
Q: If property taxes are paid through escrow, can we expect a monthly mortgage increase?
A: Escrow payment should actually decrease under the plan to reflect savings. Given that mortgage companies reassess properties annually, they should be able to account for presumed savings under the bill.
Q: How would this deal affect my property taxes if I own more than one home?
A: The increased homestead exemption only applies to the house you live in. Other properties will still benefit, however, from a pair of provisions in the plan. The school tax rate, which is decreasing by about 10 cents for every $100 in home valuation, is one way the second property will receive tax incentives, while the new pilot program will keep homes valued at $5 million or less, the taxable value can only increase by 20% year over year.
Q: If a property is homesteaded, does the cap on taxable value stay at 10%, or does it rise to 20% for homesteaded properties?
A: A homestead would remain at 10%, while the new pilot program will keep homes valued at $5 million or less to only increase by 20% year over year.
Q: How long will the ISD tax cut be in effect?
A: The tax rate cut would remain in effect unless the legislature decided to cut school funding. Lawmakers, however, have indicated that they are committed to funding schools at the same level with the rate cut.
Q: If you have a property valued at approximately $100,000, would you owe nothing in school taxes or other taxes?
A: If your home is valued at or below $100,000, you will not have to pay school maintenance and operation taxes, but you still could have to pay other taxes. For example, if voters were to approve a bond in your district, you'd still have to pay other taxes and taxing entities, like the city and the county.
Q: As a senior, if you're eligible for a property tax cut, does it happen automatically, or do you have to request it?
A: If you're birth certificate shows that you're at least 65-years-old, you will get the cut automatically without having to request it.
As long as you have questions about the property tax relief plan, we'll keep answering them! Text your questions to 512-459-9442, and we'll answer them on-air and add them to this article.