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The closely watched bill, Senate Bill 2, passed in July 2023. Additionally, voters approved a constitutional amendment in November 2023, allowing the State of Texas to use taxpayer funds for the tax cuts outlined in Senate Bill 2.
Often these laws can be convoluted and difficult to understand. With more than 35 years of experience in Texas property tax, we have analyzed the law through our expert lens and below is a summary of our findings.
The passage of Senate Bill 2 and the associated approval of a constitutional amendment in November’s election offers three significant areas of tax relief for Texas residents.
Texas will dip into its budget surplus of $18 billion and “buy down” the rate of every school district in the state by $0.107. The suppression of the tax rate will require each school district to reduce their initial 2024 tax rate by -$0.107. The State has vowed to pay school districts the difference in revenues that are not being assessed to the property owners.
As an example, if your Independent School District’s 2024 tax rate of 0.8683 is a 16.28% decrease from the 2022 tax rate of 1.0372. In addition to the lower school tax rates, the homestead exemption discount for school taxes was increased from $40,000 in 2022 to $100,000 for 2023 ($75,000 to $135,000 for Over 65 homesteads).
For example:
- If your hypothetical homestead value in 2024 was $400,000 then you would have paid taxes on $360,000 ($400,000 minus $40,000) in value last year.
- After the change in the homestead exemption amount, your 2024 hypothetical homestead taxes would be based on $300,000 ($400,000 minus $100,000).
This change will impact all the homesteaded properties in the state.
The third element of SB2 concerns a new three-year pilot program called a “circuit breaker.” This is one of the more challenging pieces to understand. This “circuit breaker” functions a lot like a homestead cap limitation (the +10% limit you’re likely familiar with) but is applied to all non-homestead exempt properties (and mineral interests) valued at or below $5 million in 2024.
While not as generous as the homestead cap, the “circuit breaker” will limit assessed value increases for qualifying properties to 20% year over year. Should the proposed value of your non-homesteaded property (not more than $5 million in value) jump up by over 20% in 2025, the “circuit breaker” will limit the taxable portion of that bill to the prior year’s value + 20%.
As an example, if you have a non-homesteaded property valued at $3.5 million in 2024 and it jumps to $4.37 million in 2025, the “circuit breaker” will limit the taxable portion to $4.2 million providing a taxable savings of $175,000. However, this “circuit breaker” is a pilot program that is only in effect from 2024-2026.
In closing, this law will provide tax relief to a lot of Texas property owners, but we still encourage you to continue to protest your property’s market value every year. There is always a chance to lower your ultimate tax burden even further. Texas Protax would be delighted to represent you in your 2025 appeal. Simply go to the top of this page and click “New Customer Sign-up” link. There you can enter your property information and client eligibility.
If you are already a client, thank you for your continued loyalty and we look forward to representing your property again in 2025. Don’t forget you should be receiving your notices of appraised value around April 2025.
Do you still have questions about property taxes? Texas Protax serves the Austin and Houston areas. We have been successful in achieving reductions for over 70 percent of our clients! Contact our office today to learn how we help owners appeal their property values and obtain the greatest reductions possible. Click Here to contact us.