Homestead exemptions reduce the taxable value of a home to limit property taxes on a primary residence.
City officials recently increased both local homestead exemptions, bumping the standard savings from 10% to 20% and increasing the senior exemption from $88,000 to $113,000, on top of various state-level exemptions. A City Council vote on June 8 could raise the senior exemption by $11,000 more.
Last year, former City Council Member Ann Kitchen and several of her colleagues backed an increase to the senior and disabled exemption. Kitchen's budget rider or provision called for the additional $11,000 in value savings to bring the overall senior and disabled exemption to $124,000.
While Kitchen's item passed alongside the overall budget, Austin did not immediately implement the change as it came weeks after fiscal year 2022-23 property tax rolls were certified.
Soon after the budget's passage, Deputy Chief Financial Officer Kim Olivares said in a memo that immediately rolling out the adjustment would have retroactively changed the city's budget calculations, required the costly reissuing of tax bills to affected residents and likely confused taxpayers overall.
The possible adjustment at the local level would come as Texas lawmakers are focused on their own proposals aimed at statewide property tax relief with new legislation that may also end up increasing homestead exemptions.
While city officials can tweak homestead exemptions at any time, an Austin spokesperson noted the Kitchen-proposed increase is now being considered this month so that potential changes can be reflected on the certified property tax rolls typically finalized later in the summer.
The savings for the typical Austin senior or disabled resident if the $11,000 exemption increase is approved have yet to be determined.
City Council and city management will work through budgeting and property tax rate discussions during the summer before final votes in August. Any new exemption would apply based on the latest property appraisals and Austin's upcoming FY 2023-24 tax rate.
Based on the city's tax rate for FY 2022-23, the expanded homestead exemption would reduce the typical homeowner's tax bill by about $51. That calculation would change based on different rates to be considered by city officials this summer.