More than $18 billion in property tax cuts were passed during the Special Session #2 of the 88th Texas Legislature.
Once the bill reached Governor Abbott’s desk, he signed it and sent it on the way to its final step in becoming Texas law. This is the largest property tax cut in Texas history, providing “Texans the property tax relief they so desperately deserve” said Governor Abbott during the historical bill signing held on August 9, 2023.
What does this mean for property owners?
The property tax cut is comprised of Senate Bill 2 and 3. These bills affect property taxes as well as franchise taxes.
Here are the highlights of what this means for Texans:
Senate Bill 2/ House Bill 2: Property Tax Reform
- The homestead exemption will increase to $100,000 from the now $25,000. This means that $100,000 will be taken off the appraised value of your homestead to compute the school portion of the property taxes owed,
- School property tax rates will decrease by approximately 10.7 cents per $100 in valuation for all home and business properties across Texas. This is due to about $12.6 billion being reallocated to school funding.
- Non-homestead property (of $5 million or less in value) appraisal values will only be allowed to increase a maximum of 20% from the previous year, plus the market value of any improvements made during the year.
Senate Bill 3/ House Bill 3: Franchise Tax Reform
- Texas Franchise “no tax due” exclusion will increase to $2.47 million of total revenue from the now $1.23 million threshold.
- “No tax due” Texas franchise tax reports will no longer have to be filed with the Texas Comptroller.
What is the final step in becoming Texas law?
The Franchise Tax Reform Bill has become Texas law by the signing of Governor Abbott and will be become effective on 1/1/2024. This is because this bill does not amend the Texas Constitution. The Property Tax Reform bill will amend the Texas Constitution and will have to be voted on by Texan voters. It will be placed on the ballot for November’s constitutional election. On the ballot it will appear as Proposition 4 – HJR 2 form the second special session. If this bill is passed by the Texas voters, Texas property owners will be able to enjoy the benefits for the 2023 tax year.
Remember to vote for Proposition 4 in November’s Constitutional Amendment Election!
Vote for Proposition 4 in November’s Constitutional Amendment Election!
Governor Abbot and the Texas Legislature passed the largest property tax cut in Texas history at more than $18 billion. Here are the highlights of what this means for property owners in Texas:
- The homestead exemption will increase to $100,000 from the now $25,000, reducing the amount of school taxes owed on homestead properties.
- School property tax will decrease by about 10.7 cents per $100 in valuation for all home and business properties across Texas.
- Appraisal values for non-homestead properties that are $5 million or less in value will only be allowed to increase a maximum of 20% from the previous year, plus the market value of any improvement made during the year.
These property tax cuts could potentially save the average property owner over $1,000 in property taxes. In order for these actions to take effect, the Texas Constitution will have to be amended. Any Texas Constitution amendments must be voted on by the voters of Texas. This amendment has been placed on the ballot for November’s Constitutional Amendment Election as Proposition 4.
Disclaimer: The information provided above is not meant to be legal or tax advise. You should consult your CPA and attorney to determine the best course of action for your situation.
Mitzi E. Sullivan, CPA is a cloud based professional services provider
specializing in cloud accounting.