Homestead exemption clears Texas Senate, awaits uncertain future in House

AUSTIN, Texas - The plan to increase the Homestead Exemption to $140,000 cleared the State Senate on a unanimous vote.  

Under Senate Bill 4, nearly half of the school tax bills that go out in November across Texas could have a zero balance.

What we know:

The potential benefits of SB 4 were restated in a statement issued by Lt. Gov. Dan Patrick’s office:

"492 school districts (49% of Texas school districts) have an average home value under $140,000, meaning school M&O property taxes will be eliminated for the average homeowner in those districts. Estimates show the average Texas homeowner will save $363.44 due to this increase. When combined with the school tax rate compression already included in the budget, the average Texas homeowner will save $496.57."

Patrick’s statement went on to say that once signed into law, SB 4 and SJR 2 will result in a constitutional amendment election in November 2025. 

This Homestead Exemption would apply retroactively to 2025 tax bills.

What they're saying:

The promise of a "zero balance" from Sen. Paul Bettencourt (R-Houston) got even bigger for homeowners on fixed incomes.

"If you turn that tax bill over in November after this approved, 80 to 90% of Texas seniors and disabled homeowners, 2 million of them will pay no tax," said Sen. Bettencourt.

During floor debate, there was some pushback from state Sen. Lois Kolkhorst (R-Brenham).

"What I would like to say is don't take a victory lap today because our work is really just beginning on what we can do on this," said Sen. Kolkhorst.

Kolkhorst read a statement from a constituent, who said the last property tax cut evaporated because of local tax hikes.

Patrick jumped into the discussion. He claimed tax reforms made two years ago are helping and will be stronger under SB 4.

"Senator Kolkhorst, I am going to celebrate this bill today. I'm going to shout it from the rooftops because it is a great bill," said Patrick.

It was also noted Gov. Greg Abbott wants additional tax reform, like requiring local tax hike proposals to have a two-thirds majority vote in order to pass. 

That prompted a suggestion from Sen. Bettencourt.

"Why don't we apply the two-thirds vote to the elected officials, so they realize they're not supposed to be raising taxes, and they have to have a two-thirds supermajority to do it," said Bettencourt.

Sen. Charles Perry (R-Lubbock) suggested an even wider shift in focus.

"Real tax reform starts at local. And we've been offloading their responsibility to the state budget now for since '19, significantly," said Sen. Perry.

The backstory:

Major property tax cuts started in 2015 with the 84th Legislature increasing the homestead exemption from $15,000 to $25,000. 

In 2022, the 87th Legislature pushed the exemption to $40,000 per homestead. 

In the second special session of the 88th Legislature, the homestead exemption increased to $100,000.

The last tax cut plan back in 2023 sparked an ugly political game of chicken between Patrick, House leaders and Abbott. That dust up dragged into a second special session.

What's next:

SB 4 now goes to the Texas House.

House Speaker Dustin Burrows has made his committee assignments, meaning the real political give-and-take is about to begin.