Harbaugh Real Estate

Texas House Passes Property Tax Relief Bill - Senate Has Its Own Versions

By Lee Harbaugh

All agree that property tax relief is needed in Texas. The solutions are still being debated.

the floor of the Texas House of Representatives

The Texas House of Representatives passed H.B. 2 on Friday which would provide an estimated $17.3 billion of property tax relief to Texas property owners. The bill would accomplish this by capping annual appraisal value increases at 5% (currently the cap is 10% for homestead properties only). It would also lower the school district tax portion of property tax bills by compressing the rate 25 cents by 2025.

It is estimated that the bill would save the average homeowner just over $500 in 2024 and over $700 in 2025. While property tax savings are welcome to everyone, not everyone is pleased with this bill's methodology.

State Rep. Gene Wu, D-Houston, said he does not support the bill because it would discourage people from selling existing homes to upsize or downsize to new homes. The thinking is that if someone has been in a home for quite a few years and property values have continued to rise, their tax burden would be drastically limited by the new cap. Moving to a new home would mean they have to pay taxes on the full value of their new purchase, and thus their tax burden would suddenly increase. In addition, Wu says the cap would unfairly punish first time homebuyers since they would be paying tax on the full market value of their home when they move in, while their long time neighbors will be paying much less due to the cap.

The Texas senate, on the other hand, has passed a bill that would raise the various exemptions instead of capping the appraised values. In their version of property tax relief, Texans would save an estimated $756 the first year and $798 the second year.

With only about six weeks left in the regular session, it is unclear whether any of the current property tax bills will actually pass and become law. All bills in the Texas congress must receive majority approval in both houses before proceeding to the governor's desk to be signed into law.