Texas Homeowners and Businesses Set for Significant Tax Breaks
Texas residents are preparing for substantial tax relief, as a new constitutional amendment is on track to receive voter approval. The amendment aims to increase the homestead exemption, providing a crucial financial benefit to homeowners across the state.
Increased Homestead Exemption
The proposed amendment will raise the homestead exemption from $100,000 to $140,000. This increase effectively reduces the taxable value of a home for public school funding, resulting in significant savings for homeowners. For those aged 65 and older or individuals living with disabilities, even greater reductions in property taxes are anticipated, following the approval of a separate amendment.
Tax Breaks for Businesses
In addition to benefits for homeowners, businesses in Texas are also set to enjoy tax breaks. A significant amendment is expected to pass, exempting up to $125,000 of business inventory from taxation by various local entities, including school districts and municipalities. This move is designed to alleviate the financial burden on business owners and stimulate local economies.
Public Support for Tax Relief
State Senator Paul Bettencourt, a Houston Republican and a key advocate for these tax measures, stated, “There is an absolute recognition of the need to provide property tax cuts for homeowners and business owners. The public embraces increasing homestead exemptions as a way to help keep people in their homes while also lowering their property tax bills.”
Impact on Homeowners
According to Zillow, the average value of a Texas home was $302,000 last year. A Tribune analysis calculated that, under the new exemption, a typical homeowner would have saved approximately $490 on school property taxes had the higher exemption already been in effect. This financial relief is expected to significantly benefit older Texans and homeowners with disabilities, who would see even larger savings.
State Budget Considerations
Texas lawmakers have committed to substantial investments aimed at reducing one of the highest property tax burdens in the nation. Over the next two years, $51 billion is earmarked for property tax cuts, including the increased homestead exemption. However, financial analysts and budget watchdogs express concerns regarding the sustainability of such spending if Texas faces an economic downturn.
Revenue Implications for Local Governments
While the state will foot the bill for the larger inventory tax exemption for school districts, other local jurisdictions may face budgetary challenges. Cities and counties that rely on taxing business inventories will either need to raise tax rates or adjust their budgets to accommodate the expected shortfall in revenue.
