ONE REASON WHY PEOPLE ARE MOVING FROM CALIFORNIA TO TEXAS

Texas Senate OKs additional tax cuts for homeowners

 

By Hannah Norton 

Community Impact

Feb 13, 2025

 

 

 

Senate Bill 4, which Texas senators passed Feb. 13, would raise tax exemptions on Texans’ primary homes to $140,000 and would apply only to taxes levied by public schools.

 

Texas senators unanimously passed legislation aimed at cutting taxes for homeowners Feb. 13.

Senate Bill 4 would raise tax exemptions on Texans’ primary homes to $140,000 and would apply only to taxes levied by public schools. The current homestead exemption is $100,000 for most homeowners, and $110,000 for seniors and people with disabilities, according to previous reporting by Community Impact.

The proposal by Sen. Paul Bettencourt, R-Houston, would build on an $18 billion tax cut package approved in 2023, which raised tax breaks for homeowners, cut tax rates charged by school districts and eliminated a tax for small and midsize businesses.

The overview

Senators approved SB 4 and an associated constitutional amendment, Senate Joint Resolution 2, in a 30-0 vote Feb. 13. The legislation now heads to the Texas House.

If passed by both chambers, the tax cut would be on voters’ ballots in November. Bettencourt noted on the Senate floor that 83% of Texas voters approved a 2023 constitutional amendment raising the homestead exemption by $60,000.

“I'm really proud of the work that we've been able to accomplish for Texas families. ... It’s a huge part of the American dream,” said Sen. Angela Paxton, R-McKinney. “This is going to give young families, many of them with school-age children, the opportunity to finally be able to afford a home for themselves.”

The average Texas homeowner could see nearly $500 in annual savings under the Senate’s tax relief plans, according to estimates from Bettencourt’s office. This includes $363 from the proposed homestead exemption increase and $133 from reductions in school tax rates.

In an early draft of the 2026-27 state budget, the Senate set aside $6 billion to raise the homestead exemption and continue trimming school tax rates under legislation passed in 2019.

Zooming in

In about 49% of Texas school districts, the average home value is below $140,000, Bettencourt said Feb. 13. The average homeowner in those areas would therefore pay no property taxes to their local school districts, he said.

“This is real money buying down real property taxes,” Bettencourt said. “[Taxpayers] will have this exemption for the rest of their lives.”

Up to 90% of Texans over 65 years old would also be exempt from school property taxes if SB 4 becomes law, Charles Scoma, a member of the Texas Silver-Haired Legislature, said during a Feb. 11 committee hearing on the bill. The group advocates for seniors at the capitol.

“These folks have contributed to our community over the years, ... and we can only do that if we retain our health and if we are able to retain our homestead,” Scoma said. “A lot of seniors now are moving into the homeless category, unfortunately, because of [high] costs.”

During discussion on the Senate floor Feb. 13, Sen. Lois Kolkhorst, R-Brenham, said she supported SB 4 but urged her colleagues not to “take a victory lap today, because our work is really just beginning.”

Kolkhorst read a message from a constituent who said they believe the $100,000 homestead exemption passed in 2023 “was a wash.” The constituent’s appraisal district review board hiked their home’s appraised value by $71,000 last year, “completely wiping out the increased homestead exemption,” Kolkhorst said.

Kolkhorst did not specify where this constituent lives. She represents a stretch of southeast Texas, from Grimes County outside of College Station to Aransas County along the coast.

“It's just critically important that we try to get a handle on what's going on at the local level,” said Sen. Joan Huffman, R-Houston.

Texas Republicans, including Gov. Greg Abbott, have vowed this session to make it harder for taxing entities, such as cities and school districts, to raise taxes after the Legislature approves cuts. Abbott has said local governments should be required to receive two-thirds approval from local voters during a general election before they can raise tax rates.

One more thing

Sen. Sarah Eckhardt, D-Austin, said Feb. 13 she believes the Legislature also needs to work on tax reductions for people who do not own homes.

“It feels great to cut homeowners’ taxes—no politician would ever not take the opportunity to cut homeowners’ taxes,” Eckhardt said. “But I'm sobered that when we permanently increase the burden on one class of property, we, by definition, permanently increase the tax burden on all the other classes of property owners.”

Eckhardt said about 5% of Texas homeowners are cost-burdened, which means they spend over 30% of their income on housing-related expenses. Meanwhile, half of Texas renters are cost-burdened, she said.

“This bill could increase the cost of rent for those renters if we don't continue to aggressively build more housing stock,” Eckhardt said.

During the Feb. 11 hearing, Shannon Halbrook, a fiscal analyst for the progressive think tank Every Texan, said lawmakers should consider whether expanding the homestead exemption is the best way to support Texans, since lawmakers will not always have a $24 billion budget surplus to spend.

“It's time to sort of take a step back and think about [whether] we should continue to do more tax cuts, or should we think about some of the other priorities for the state—namely investing in our public education system, in our state workforce, in our infrastructure and our health care system,” Halbrook said Feb. 11.