While Texas is typically viewed as a low-tax state without an income tax, we have some of the highest property taxes in the country. If you are a homeowner in Texas, you’re likely not surprised to hear that.
A new property tax proposition (Prop 4) was recently passed in Texas to provide tax relief to homeowners starting in 2023. Here are the key details:
- The homestead exemption, which excludes some home value from school district taxes, is increasing from $40,000 to $100,000.
- Estimates suggest the average homeowner will save around $2,500 in property taxes over the next 2 years, equaling over $1,000 in savings per year.
- For 3 years, non-primary properties like rentals can only increase in taxable value by 20% maximum.
- The plan costs $18 billion. The state constitution limits legislative spending, presenting challenges to funding the tax cuts.
- A provision makes the additional school spending not count toward the constitutional spending cap. This enables the legislature to allocate funds for the plan without violating the cap.
Basically the proposition boils down to this: increases the homestead exemption, limits tax appraisal increases on non-primary properties, and utilizes a provision to accommodate spending increases within state budget rules to pay for the school tax deficit this will incur. The full impacts remain to be seen.
How to file for homestead exemption in Texas:
- Here is the link to apply online if your home is located in Travis County.
- You must own and live in the home as your main residence on January 1st of the tax year you are applying for.
- Apply by April 30th each year.
- If you bought a home without an exemption, you can apply right away for a partial exemption that year.
- You can only get one homestead exemption even if you own more than one home.
- You will need a copy of your Texas driver’s license or ID card showing the address of the home.
- You must live in the home for at least one year before the exemption limits increases in your home’s assessed value to 10% or less each year.
Feel free to contact me if you’d like additional information on what this means for homeowners and/or need any part of the above requirements explained in more detail.