The Texas Senate has approved their $16.5 billion property tax relief package signed by all 31 members of the state Senate. This bipartisan initiative seeks to alleviate property taxes in three distinct ways. If the package passes the Texas House of Representatives, it would be up to Texas voters to approve it in November. The package is split up into three different bills and a joint resolution.

The first of which is Senate Bill 3 which would raise the Homestead Exemption Act from $40,000, up to $70,000 which reduces the portion of a home’s value for tax purposes. Additionally, those who are disabled and/or 65 and older have another exemption which is currently $10,000. But SB3 would raise that to $30,000. That is added to the Homestead Exemption Act for them. 

Senate Bill 4 focuses on lowering school property tax rates to $0.07 out of $100 of property tax evaluation. The Texas Senate plans to fund over 5 billion to school districts to make up for any loss in revenue. 

State senators argue that lowering the school district property tax rate would allow ISDs to keep more of their recapture payments. Recapture is a term referred to a state practice where a school district has excess tax revenue after funding its entitlement. That excess tax revenue the school receives has to be given to the state. The state then gives it to school districts that cannot make up their entitlement based on low property values. It is nicknamed the Robin Hood law. 

It is true that schools would not have to pay as much recapture payments to the state with a lower school property tax rate. However, there is skepticism that schools would not, if at all, see any new money since the rates would be lower.

Another skepticism is that the state has a budget surplus because Texans faced higher sales tax, property tax appraisals, and inflation. When that budget surplus runs out, how does the state stay committed to keeping the school district property tax rate lower? There is the worry that the state would have to raise something like sales taxes to keep this up. 

Senate Bill 5 would increase a business personal property tax exemption from $2,500 up to $25,000. Furthermore, it would allow a 20% tax credit on inventory and property expenses. There is optimism that small businesses in particular will significantly benefit from this property relief package.

The joint resolution will just require Texas voters to approve this before it can go into law. But first, it must get past the Texas House of Representatives before it can be signed by the Governor and go to the ballot for voters to approve of. 

The Texas House has a different proposal of how to give property tax relief by lowering the appraisal value from increasing 10% every year down to 5%. You can find more about that here.