The new version of Senate Bill 3 combines priorities of both the House and Senate. The two chambers previously passed dueling property tax relief packages.
Property tax relief is a top priority for Texas Republicans—including Gov. Greg Abbott—this legislative session. But until now, House Speaker Dade Phelan and Lt. Gov. Dan Patrick have stood behind their chamber’s proposals and signaled there is limited room to negotiate.
The House has pushed to cut Texas’ 10% appraisal cap in half, while the Senate has focused on raising the homestead exemption. The latest version of the bill combines the two and extends tax relief to business owners.
SB 3 would:
- Prevent the taxable value of residential and commercial property from increasing by more than 5% each year
- Exempt $100,000 of a home's value from taxation, with a $110,000 exemption for seniors and people with disabilities
- Cut school district property tax rates by 15 cents per $100 valuation
- Save the average homeowner roughly $2,800 over two years.
SB 3 was approved by the House with a 147-0 vote May 19. The bill now heads back to the Senate, which can approve the House’s changes or request a conference committee to hammer out the details.
Limiting annual increases
Property value is determined annually by county appraisal districts, which review all property in a county and determine how much it is worth. Under current state law, the taxable value of residential property can increase by 10% each year.
SB 3 would prevent the taxable value from increasing by more than 5% annually.
The cap only applies to homes right now, but the House proposed expanding it to all property, including businesses and land.
“We want to have the caps so that there's predictability and stability for our property owners,” Meyer said in April.
At an April 13 press conference, Patrick said adjusting the appraisal cap is not a good way to provide property tax relief.
Seniors own about 40% of homes in Texas, but Patrick said the new appraisal cap would not benefit them, because their property appraisals are already capped. On the other hand, he said larger homestead exemptions would save seniors thousands of dollars each year.
“We can negotiate on just about everything, but I do not negotiate on bad math,” Patrick said.
Patrick has not commented directly on the latest version of SB 3.
Raising the homestead exemption
A homestead exemption is the portion of a home’s value that cannot be taxed. Texans currently receive a $40,000 exemption on their primary home, with an additional $10,000 exemption for seniors and people with disabilities.
SB 3 would increase the homestead exemption to $100,000 across the board and $110,000 for seniors and people with disabilities. This is higher than the Senate’s original proposal.
“It’s important that we focus the money where people need it the most,” said Sen. Juan Hinojosa, D-McAllen, in March.
Cutting school district tax rates
SB 3 would decrease property tax rates for school districts by 15 cents per $100 valuation.
Because schools largely depend on property taxes as a funding source, the state would provide districts with $12 billion to make up for lost revenue. Funneling money back into schools makes up most of the estimated $16.3 billion cost of the bill.
In a news release, Phelan said the state would pay for 54% of public education funding under SB 3.
The bill would also reduce the amount of school districts that participate in recapture, lawmakers said. Under the recapture program, districts that bring in high property tax revenue return some money to the state, which then allocates it to “property-poor” districts to ensure schools are funded equally.
According to Phelan’s office, SB 3 would give homeowners thousands of dollars in property tax relief. The owner of a $350,000 home would likely pay $1,325 less on their 2024 property tax bill and $1,518 less in 2025, resulting in $2,843 in savings. Seniors and people with disabilities would save even more.
Leaving it up to voters
The House also approved Senate Joint Resolution 3 with a unanimous vote May 18. The resolution would create a constitutional amendment to authorize the tax cuts.
If SB 3 is approved by the Senate, Texas voters will make the final decision on property tax relief. The amendment would be added to all ballots during the November general election.
"Our chamber looks forward to working with the Texas Senate in these final days of the 88th regular legislative session to send what would be the largest property tax cut in state history to Governor Abbott’s desk," Phelan said in a news release.
