Texas Property Tax Proposal: Increasing the Homestead Exemption

In February 2025, the Texas Senate unanimously passed Senate Bill 4 (SB 4) and Senate Joint Resolution 2 (SJR 2), introducing a significant increase to the state's homestead exemption. This legislative move aims to provide substantial property tax relief to homeowners across Texas.

Overview of Senate Bill 4 (SB 4)

Authored by Senator Paul Bettencourt and championed by Lieutenant Governor Dan Patrick, SB 4 proposes the following key changes:

• Increased Homestead Exemption: Raises the homestead exemption for school district property taxes from $100,000 to $140,000 for general homeowners.
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• Additional Benefits for Seniors: For homeowners aged 65 and older, the exemption increases to $150,000, offering enhanced relief to senior citizens.
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• School District Compensation: Includes provisions to ensure that school districts are reimbursed for any revenue losses resulting from the increased exemptions, safeguarding public education funding.
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Impact on Residential Property Owners

The proposed changes are poised to have a notable impact on homeowners:

• Tax Savings: The average Texas homeowner is projected to save approximately $363.44 annually due to the increased exemption. When combined with existing tax rate compression measures, total savings could reach around $496.57 per year.
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• Elimination of School Property Taxes in Some Districts: In nearly half of Texas school districts (49%), where the average home value is below $140,000, homeowners may see their school maintenance and operations (M&O) property taxes eliminated entirely.
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• Long-Term Relief: By embedding these exemptions into the Texas Constitution, homeowners are assured of enduring tax relief, with the increased exemptions applying retroactively to 2025 tax bills upon voter approval.
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Next Steps

For these changes to take effect, the following must occur:

1. House Approval: The Texas House of Representatives needs to pass SB 4 and SJR 2.
2. Voter Referendum: A constitutional amendment proposition will be placed on the November 2025 ballot. Voter approval is required to codify the increased homestead exemptions into the state constitution.
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If these steps are successfully completed, Texas homeowners can anticipate significant and lasting reductions in their property tax obligations.

Note: Property tax laws and proposals are subject to change. Homeowners are encouraged to stay informed and consult with tax professionals for personalized advice.

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