Are Transformational Property Tax Changes on the Horizon?

It’s the first week to pre-file legislation in the run-up to the 88^th Legislature and already swarms of bills have been proposed to make big changes to Texas’ onerous property tax system, which continues to wallop renters, homeowners, and practically everyone else. Here’s a look at just a few.

• House Bill 29: Proposes to prohibit school districts from levying a Maintenance & Operations (M&O) tax by January 2026. However, each ISD would still retain the ability to levy an enrichment tax at a rate not to exceed $0.17 per $100 of property valuation. The bill would also establish a joint interim committee to determine appropriate alternative revenue sources and would require the committee to issue a report no later than November 1, 2024 to educate Members and the public.

• House Bill 43 and 268: Proposes to eliminate most forms of taxation and instead allow for the imposition of a Value Added Tax (VAT) set at “6.72 percent of the taxpayer’s taxable receipts from the supply of services or property.” The measure would also prohibit ISDs from levying an M&O tax on or after January 1, 2028.

• House Bill 174: Proposes to dedicate approximately 90% of the state’s anticipated $27 billion budget surplus for tax relief purposes. To achieve its intended effect, the measure would require the Texas Education Agency to apply the monies in such a way so that ISD tax rates were compressed.

• House Bill 335: Proposes to apply the limitation on appraised value to all real property, instead of only residence homesteads. Additionally, the measure would lower the appraised value limit from 10% to 5%.

• House Bill 610 and House Joint Resolution 44: Proposes to increase the residence homestead exemption for school district property taxes from $40,000 to $360,000. According to the bill author, if enacted, the measures “would provide $20 billion in residential school property tax relief for all Texas homeowners.”

• Senate Bill 152: Proposes to lower the limitation on appraised value for residence homesteads from 10% to 5%.

These are just a few of the many bills that have been pre-filed on property taxes. Many others have also been filed and still others will make their debut shortly.

The nature of the solutions being proposed is telling. It shows that many Members understand that property taxpayers are in a state of crisis—and big, big changes are warranted. It also suggests that legislators are primed to help Governor Abbott deliver on his campaign promise for “the largest property tax cut in the history of the state.” This is the caliber of change needed now.