Texas Senate Introduces $16.5 Billion Property Tax Relief Plan

Texas Republican Lt. Governor On Tuesday, Dan Patrick announced the plan of the Senate Finance Committee to provide billions of dollars in property tax relief.

Patrick is joined by Republican state senators. Tan Parker and Tom Bettencourt drafted Senate Bills 3 and 4 to cut $16.5 billion in property taxes. The state has a record $33Billion budget surplus.

“These are eye-popping off-the-chart numbers of savings that [taxpayers] can realize through the senate plan,” Bettencourt spoke to reporters at a press conference held at the Texas Capitol Building in Austin.

SB 3 would increase the exemption for homestead to $70,000. This is a 75% increase on the $40,000 currently (pdf). The exemption would cut homeowner property taxes by more than $750 annually.

The proposal would also triple school district exemptions for homeowners 65+ and disabled from $10,000 to $30,000. This would bring their total exemptions to $100,000. There are estimated property tax cuts of more than $1,000 annually.

“They’re getting $100,000 of exemptions, and that’s going to stay with them for the rest of their lives,” Bettencourt spoke.

31 senators jointly co-authored the bipartisan bill. The exemption increase will be up for vote in November. The measure would become effective immediately if it is approved.

Propositions 1 und 2 were passed by voters in May. They reduce the property limit for school maintenance taxes and operations taxes imposed on homesteads of disabled taxpayers. Additionally, they raise the homestead exemption to $25,000 and $40,000, respectively.

SB 4 would lower the number school districts that are required to pay recapture. Also known as Robin Hood (pdf), it reduces the limit on a school district’s maximum compression rate (MCR) from 90 percent to 80% of another district’s. (pdf)

Bettencourt stated that the bill would provide $5.38 Billion in tax relief.

Reduced property tax for businesses

SB 5 would provide $1.5 billion in tax relief for businesses (pdf).

“We hear so much from the business community about the importance of reducing the inventory tax, and in fact, we are doing that, as well,” Parker said this to reporters.

The bill would reduce a business’s inventory taxes bill by 20% and increase the exemption for personal property from $2,500 to $25,000

“So, again, very powerful, very impactful relief for Texas businesses with regard to the inventory tax,” Parker agreed.

House Competing Property Tax Bill

Patrick took aim at House Bill 2, a property tax relief bill introduced on Monday, which would provide $12 billion in property tax relief.

One component of the bill would reduce the MCR by 15 cents but not less than 90 percent of the maximum compressed rate.

The second component would limit the growth of the appraised value of real estate at 5 percent. This is down from 10 percent currently.

“If you lower the appraisal cap, the tax rate will go up,” Patrick said. “And in a few years, we will have destroyed everything we’ve done.”

House Speaker Dade Phelan said HB 2 would reduce school district taxes for a $350,000 home by $460 in 2024 and $590 in 2025.

A public hearing is scheduled for March 15 to hear the Senate package of bills.