The Details of the Deal

Here's what's included in the $18 billion plan to rein in property taxes:

$100,000 homestead exemption(up from $40,000).

$2.5 million threshold for franchise-tax filers(up from $1.25 million). This is the amount below which business do not have to pay franchise taxes. The bill also eliminates the requirement to file if no taxes are due.

$12 billion to buy down local school tax rates

Circuit breakera pilot program to cap year-over-year appraisal-value increases at 20% for non-homestead properties valued under $5 million.

The Texas Legislature approved more than $18 billion to rein in Texas property taxes. According to Sen. Paul Bettencourt, the lead author of the legislation, the average Texas homeowner under age 65 can expect about $1,300 in tax savings per year because of this property tax reform. Those over 65 may see an average of about $1,450 per year in savings.

Texas REALTORS® appreciates that the compromise includes an increase in residence homestead exemptions to $100,000 as prioritized by the lieutenant governor and Senate during the 88th regular session. We are also pleased to see thoughtful consideration given to the House's concerns about the property tax burden on non-homestead properties, such as rental properties and small businesses, said Texas REALTORS® 2023 Chair Marcus Phipps.

Texans' property taxes are among the highest in the country. This summer's landmark deal comes amid persistent affordability challenges around the state over the past several years.

The property tax reform will keep the American Dream of homeownership within reach and provide welcome savings to all property owners. Additionally, by increasing the minimum threshold for franchise tax filers from $1.25 million to $2.5 million, this compromise plan will save money for 67,000 small businesses around the state.

As the leading advocate for private property rights and homeowners, Texas REALTORS® was proud to be part of the conversation on reining in property taxes. The association is also thankful to the many lawmakers who worked throughout the regular and special sessions to find a solution to this issue.

How we got here

The tax deal came in early July, but this monumental reform has been brewing for almost a year. After many state lawmakers made promises to provide property tax relief during the 2022 elections, work began during the regular session of the Legislature in 2023 and continued through two special sessions. During this time, lawmakers debated the most equitable and effective methods of achieving tax relief for all Texas property owners.

During the regular session, lawmakers proposed numerous methods of achieving property tax reform. Compression had a consistent presence among the changing versions of various property tax bills. This is the process through which the state buys down taxes levied by local school districtslessening the burden they place on property owners in their jurisdictions.

The final version of property tax reform that passed the Legislature a little over a week into the second-called special session of the 88th Texas Legislature balances the interests of homeowners (through the homestead exemption) and owners of other property types through the inclusion of compression (which benefits all property types) and the circuit breaker program (which benefits non-homestead properties).

Not a done deal yet

With the legislation passed and signed by the governor, lawmakers have done their part to secure historic savings on property taxes. Now, Texans must do theirs. The tax proposals in the package require constitutional amendments, meaning that voters must approve property tax reform on their November ballotsyet another reason to turn out and cast your vote!