AUSTIN — May 2025.
The Texas Senate just passed SB 4 and SJR 85, hiking the school-tax homestead exemption from $100,000 to $140,000 (and $150,000 for seniors/disabled owners). If the House concurs and voters approve a November ballot measure, the change takes effect 1 January 2026 (applied to 2025 tax bills). The Texas TribuneThe Texas Tribune
How much would you save?
Using the statewide average school M&O rate ($0.91 per $100 assessed value):
- $350 k home, current exemption $100 k → taxable = $250 k → $2,275 tax
- New exemption $140 k → taxable = $210 k → $1,911 tax
Annual savings: $364—mirroring Senate estimates.
Why now?
Texas ran a $3.5 billion surplus. Gov. Abbott labeled property-tax relief an emergency item. Lawmakers chose exemption boosts over deeper “compression” of rates, betting voters prefer a visible line-item discount.
Winners, losers, open questions
| Stakeholder | Effect |
|---|---|
| Homeowners | Saves $360–$500/yr for most; bigger % break on starter homes. |
| Renters | No direct cut—landlords keep any benefit. |
| Schools | State’s school-finance formula backfills lost revenue (~$3 B/2 yrs). |
| Future budgets | Critics warn of sales-tax dependence if oil revenue dips. |
How to prep if you plan to buy this year
- File your homestead exemption immediately after closing—the $100 k cap still applies for 2024 bills.
- Run worst-case scenarios: local appraisal districts can raise market value even as the exemption rises.
- Watch November ballot language—some opposition groups push for bigger rate compression instead.
“Christmas could come early,” quipped bill author Sen. Paul Bettencourt, though House leaders want a hybrid plan. FOX 7 Austin
A trip to the voting booth this fall could lock in a four-figure lifetime tax cut on a typical Texas home—just as mortgage rates (perhaps) start to ease.
