After debates about how to address property tax reform since the beginning of the legislative session, the Texas Senate and the Texas House of Representatives have made a compromise on property tax reform that gives and takes a little from each chamber. 

The $18 billion property tax cut plan includes providing state funds for school districts to lower their school district tax rates. $12 billion will be used to lower school district tax rates for both homeowners and businesses. The bill reduces school district property tax rates by 10.7 cents. 

Another provision of the bill will raise the Homestead Exemption from $40,000 to $100,000. State Senator Paul Bettencourt said that this will not impact state funding for public schools. The average homeowner can expect to save $1,200 to almost $1,500 dollars a year. According to KHOU11, Lt. Governor Dan Patrick stated that “The average homeowner will see their school property taxes cut by a whopping 41%. Nothing like that has ever happened before.” For businesses, that will be a 23% cut.

Additionally, counties with 75,000 or more people will add three additional seats to appraisal boards made up of citizens that are elected by voters.

The new plan will also start a 3-year pilot program for properties that annually make under 5 million dollars, both residential (those that do not qualify for the Homestead Exemption) and commercial, to have their appraisal values rise no higher than 20% in a year. 

Lastly, the Franchise Tax Exemption for businesses will grow those to businesses who annually make under 2.47 million.

Governor Abbott commended the work of both chambers, saying that it was a step in the right direction for his campaign promise to lower property taxes. The Senate got what it wanted because its big focus was on increasing the Homestead Exemption. The House gets what it wants to help out businesses by having appraisal limits on both commercial properties and increasing the franchise tax.

A press release by Lt. Governor Dan Patrick and House Speaker Dade Phelan states that the “agreement on proposed legislation that will deliver the biggest property tax cut in Texas history. Both leaders met last week in Austin and, along with members of the House and Senate, have continued working day and night to reach a consensus. The deal represents a significant win for providing relief to Texas property owners and reflects the commitment of Texas leaders to address the concerns of taxpayers and provide significant relief from the burden of escalating property taxes,” said the press statement.