$16.5 Billion Property Tax Relief Bill Soars Through Texas Senate Unanimously

A neighborhood in Roanoke, Texas, on March 23, 2023. (Jana J. Pruet/The Epoch Times)

Texas Lt. Gov. Dan Patrick’s $16.5 billion property tax relief plan soared through the Senate in a series of unanimous votes on the four-part package, which could bring hefty savings for millions of homeowners and business owners.

“The Senate’s Property Tax Relief package moved through the Senate like a bullet train 124-0 because all 31 Senators know Texas homesteaders and business owners need real property tax relief, and what this package delivers to Texans is permanent, off the chart’s tax relief,” Republic state Sen. Tom Bettencourt said in a statement following the Senate’s approval of the four-part package.

Texas is sitting on a record $33 billion surplus, the largest cash carryover on record for the Lonestar state, according to Texas Comptroller Glenn Hegar.

“We are unlikely to have an opportunity like this again,” Hegar said in a press release earlier this year. “This budgeting session is truly a once-in-a-lifetime session.”

The bipartisan tax relief package includes Senate Bills 3, 4, and 5, as well as Senate Joint Resolution 3, a proposed amendment to the Texas Constitution, which voters would need to approve for the homestead increase to take effect.

“Since the Comptroller stated in 2022 that Texas would have a budget surplus for the 2022-2023 biennium, I have been very clear that a significant chunk of that surplus must be returned to the taxpayers before committing to any new spending,” Patrick said in a statement.

SB 3 would increase the homestead exemption to $70,000 for homeowners, a 75 percent increase over the current $40,000. The exemption would save homeowners hundreds of dollars per year. (pdf)

In addition, school district exemptions would triple for homeowners 65 and older or disabled from $10,000 to $30,000, bringing their total to $100,000 for the rest of their lives. The estimated saving for qualifying homeowners would be $1,062 per year.

If the bill passes in the House, SJR 3 will be placed on the November ballot for voters to decide on the proposed homestead exemption increase. (pdf)

To Be Retroactive

If voters approve the measure, it will be effective for 2023 property tax bills.

“We are certain that the public will vote for this unprecedented property tax relief package if given the opportunity,” Bettencourt and Parker said in a joint statement. “It will be retroactive on January 1st and cut tax bills in 2023!”

Last May, voters overwhelmingly approved Propositions 1 and 2 to reduce the property tax limit for school maintenance and operations taxes imposed on elderly or disabled homesteads and raised the homestead exemption from $25,000 to $40,000, respectively.

SB 4 would provide an additional $5.38 billion in tax rate compression and reduce the number of districts required to pay recapture, also known as Robin Hood. (pdf)

“Rate compression benefits all taxpayers and reduces recapture by funding addition Maximum Compressed Rate (MCR) compression in school finance formulas,” the release stated. “Expanding the school finance equity band will allow school districts to reduce their M&O [maintenance and operations] tax rate further.”

Homeowners would see a reduction of about 7 cents per $100 valuation on a portion of the school taxes on their property tax bill.

SB 5 would bring $1.5 billion in tax relief for businesses. (pdf)

It would provide a 20 percent reduction on the business inventory tax. It would also increase the personal property exemption to $25,000, up from $2,500.

“Small businesses are the bedrock of our economy, and they have been hit hard by record inflation,” Parker said. “SB 5 will provide meaningful tax relief for businesses across Texas, helping them stay afloat, creating more job opportunities for Texans, and keeping Texas a competitive global player as the 8th largest economy in the world.”

Why a Budget Surplus?

Hegar attributes the boon to the state’s “vigorous economic growth” since the end of the COVID-19 pandemic, increased energy rates, and the “highest rate of general price inflation in 40 years.”

The state’s revenues come from over 60 different taxes, fees, and assessments.

“Sales tax collections make up the state’s largest source (53 percent) of GR-R revenues in 2024-25. The [biennial revenue estimate] projects sales tax revenues will increase by 9.1 percent from the 2022-23 biennium, reaching $87.9 billion for the 2024-25 biennium,” according to Hegar.

The Texas Constitution forbids the state from imposing a state income tax.