According to Texas lawmakers, homeowners would see the largest cut to their property taxes in history according as the Lt. Governor and members of the Senate unveiled the chamber’s plan for tax cuts this session.
The three bills presented represent $16.5 billion in tax savings across Texas.
“It’s important to know that we’re touching every taxpayer, every homeowner, every business owner, with needed tax relief,” said Houston Senator Paul Bettencourt. “We’re spending the money as wisely as we can to get the maximum tax relief possible - and this plan has eyepopping numbers.”
Senate Bill 3, by Bettencourt, would raise the homestead exemption - the amount of value a homeowner can write off before taxes - by 75 percent up to $70,000. This was the plan announced by Lt. Governor Dan Patrick earlier in the session, but Bettencourt revealed Tuesday that a second component will triple the senior property tax exemption for homeowners 65 years of age and older to $30,000.
Combined with the increase in the base exemption, Texas seniors would qualify for an exemption of $100,000, said Bettencourt.
Based on the average home value, he said homeowners would see a reduction in their property tax bill of around $800 in the first two years. For senior homeowners, they could see savings above $1000 each year. Around 2.2 million homesteads, about 40 percent of the state total, are owned by seniors.
Senate Bill 4, also by Bettencourt, would buy down local school property taxes by another $5.83 billion on top of on-going rate compression from 2019’s education reform bill for a total of $10.68 billion in school property tax rate reduction. Senate Finance Committee chair and bill co-author Joan Huffman said that the legislature will ensure the state will cover any lost local revenue.
The third bill, SB 5 by Flower Mound Senator Tan Parker, is aimed at business taxes, and would increase the exemptions for the tax on business personal property up from two-and-a-half to 20 percent, and would reduce inventory taxes by 20 percent., or around $1.5 billion.
According to Bettencourt, the Senate plan focuses on exemptions because that’s the best way to deliver lasting cuts to taxpayers.
“An exemption is permanent,” Bettencourt said. “These permanent exemptions will be there year after year to save Texas homeowners and business owners the money they need plus [tax rate] compression.” He added that combination has led to the reduction of the property tax burden across the state.
Because the state capped local government spending growth in 2019 - 3.5 percent for counties and cities and 2.5 percent for schools - when appraisal values go up, the taxing entity must lower their tax rate to stay under the spending cap. This has largely disconnected appraisal growth and property tax growth, said Lt. Gov. Dan Patrick.
“We all got calls about appraisals going up, but we didn’t get calls in October when the bills went out. The real key to saving Texans’ taxes is limiting the size of government. It’s the state’s cap on its own spending, combined with record revenue projections and a record budget surplusthat’s driving the size of the relief package.
Bettencourt agreed. “We’ve never had $16.5 billion to throw at property tax relief, and that is a record number,” he said. “It is well spent and I believe it’s going to be well received by the citizens and taxpayers of the great state of Texas.”