Property Tax Relief Package Passed

Posted By: Scott Lynch Legislative Updates,

Last night, the Texas Legislature passed a historic Property Tax Relief Package with overwhelming bipartisan support.  

Both chambers adjourned sine die which ends the second called session. A third called session is not expected until the fall. The tax relief package is now heading to the Governor’s desk for signature.

The plan is in three bills: HJR 2 by MetcalfSB 2 by Bettencourt, and SB 3 by Bettencourt and Parker. There were 18 amendments offered on SB 2, the centerpiece of the package. Even though the amendments failed, the floor debate and voting were not without drama. Most of the amendments were offered by Democrats, including one amendment offered by Rep. Plesa (D-Dallas) that would have provided relief for renters. The Plesa Amendment failed 51-81 in a near party-line split, with only one Democrat, Richard Raymond (D-Laredo), voting against the amendment.

The three-bill package has these major features:

  • Homestead Exemption – An increase in the state-mandated school tax homestead exemption to $100,000, up from the current $40,000. Also, a prohibition against cities, counties, and school districts from reducing any homestead exemption in place during tax year 2022.
  • Rate Compression – A 7¢ (per $100 in property value) reduction in the school tax rate, across the board for all properties. This is known as rate compression.
  • Appraisal Cap “Circuit Breaker” – A new 20% cap on annual appraisal increases of non-homestead real properties valued below $5 million. The bill refers to the cap as a circuit breaker. It is effective for tax years 2024, 2025, and 2026, after which it goes away or can be continued by a future Legislature. The $5 million threshold is increased annually by CPI.
  • Elected Boards – In counties over 75,000 in population, adding elected members to central appraisal district (CAD) governing boards. Currently, all CAD board members are appointed. In addition, in counties over 75,000 in population, assigns the duty of appointing appraisal review boards (ARBs) to the newly restructured CAD boards.
  • Franchise Tax Exemption – Doubles the franchise tax small business exemption, which is based on the total revenue of a business, from the current $1.23 million to $2.47 million. Also repeals the requirement that a no-tax-due report be filed annually by exempt (small) entities.
  • Constitutional Spending Limit Fix – Provides a bypass of the state’s constitutional spending limit for the financing of property tax relief.