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