A Texas Senate committee on Tuesday swiftly and unanimously approved a measure aimed at easing the burden of high property taxes for homeowners across the state. The proposal seeks to provide billions in tax relief by increasing the homestead exemption for school district property taxes.
Senate Bill 4, the Senate’s flagship property tax-cut measure, would raise the state’s homestead exemption from $100,000 to $140,000. This means homeowners would see a larger portion of their property value shielded from school district taxes. The Senate Local Government Committee gave the green light to the bill with a 6-0 vote, sending it to the full Senate for further consideration.
“This is real money for folks to keep them in their homes,” said Sen. Paul Bettencourt, a Houston Republican and the bill’s author.
Property tax relief remains a high priority for Texas lawmakers this year, with Gov. Greg Abbott designating tax cuts as an “emergency item.” This designation allows for expedited legislative action, and Abbott has urged lawmakers to allocate billions toward reducing property tax burdens. The Senate’s proposed budget includes $3 billion specifically to increase the homestead exemption over the next two years. According to estimates from the Legislative Budget Board, the exemption increase could cost the state $7.7 billion by 2030.
In addition to raising the homestead exemption, legislators plan to allocate another $3 billion to school districts to help lower local tax rates—honoring commitments made in prior legislative sessions. If these measures had been in place last year, a Texas homeowner paying the average school district tax rate would have saved approximately $528, based on a Texas Tribune analysis.
Texas consistently ranks among states with the highest property taxes, a consequence of its lack of an income tax. Local governments rely heavily on property taxes to fund essential services such as public education, law enforcement, and infrastructure. Between 2010 and 2023, the median property tax bill for Texas homeowners surged nearly 30%—outpacing the national average nearly threefold, according to U.S. Census Bureau data.
Republican lawmakers have long sought to rein in rising property tax bills, culminating in last year’s passage of $12.7 billion in tax cuts. That package included an increase to the homestead exemption and billions in funding for school districts to lower property tax rates. According to a Texas Tribune analysis, many homeowners across the state have begun to see the benefits of those cuts, alongside other tax relief measures implemented since 2019.
However, property tax collections by school districts rose again in 2024 after a temporary decline the previous year, according to estimates from the Texas Comptroller’s office. Additionally, tax bills for homeowners in Harris, Travis, and Dallas counties continued to rise, partly due to increasing property values. Some local jurisdictions in Harris and Travis counties also raised tax rates, further adding to the burden.
While the homestead exemption increase will directly benefit homeowners, Texas’ 4.2 million renter households are not eligible for similar relief. Tenants effectively contribute to property taxes through their rent payments, but state law does not provide direct tax relief to them. In response to a question from Sen. Molly Cook, a Houston Democrat, Bettencourt argued that landlords would pass along savings from tax cuts to renters in order to remain competitive. He pointed to slowing rent growth in major Texas metros, with Austin experiencing nearly two years of declining rents.
Supporters of the bill say the increased exemption would offer much-needed relief to homeowners grappling with rising housing costs, including higher property insurance rates. Advocates also argue that it could make homeownership more attainable for Texans struggling to enter the housing market.
“It’s not a panacea, but it certainly makes a difference,” said Dixon Holman, an Arlington real estate agent and board member of Texas Realtors.
However, some research suggests that increasing tax exemptions could have unintended consequences. A study from New York University and the University of Hamburg found that larger tax breaks may discourage homeowners from selling, reducing housing inventory and driving up home prices. While Texas currently has more homes on the market than during the COVID-19 pandemic, the state still faces a significant housing shortage.
The Senate has also allocated $500 million for business tax cuts, though the specifics of that plan remain unclear as the necessary legislation has yet to be filed.
Meanwhile, the Texas House has yet to reveal its approach to property tax reform this session. With newly elected House Speaker Dustin Burrows, R-Lubbock, still in the process of forming committees, legislative movement in the House remains on hold. How the lower chamber will handle property tax cuts remains to be seen as the session progresses.