The motion was carried unanimously.
This is the second time in 12 months the City Council increased the exemption for residents over age 65. In August 2021, council raised that exemption from $5,000 to $15,000.
“There’s only a few ways you can assist the 65-plus [age] group under state law,” Lakeway Mayor Thomas Kilgore said. “My idea was that we should just make our homestead exemption more valuable, and if you can save someone—with inflation—$40 this year or $50 five years from now, that will be a meaningful difference for someone on a fixed income.”
According to the Travis Central Appraisal District, a homestead exemption is a legal provision that can help individuals and families pay less in taxes on their home. For example, if the tax exemption is $25,000, then an individual who owns a $175,000 property would only be taxed on $150,000 of the property’s value.
Any year the city makes a change to property tax exemptions, there is going to be an effect on those taxes, Lakeway City Manager Julie Oakley said.
The city saw that change in taxes this year; when 2,559 properties received an over age 65 exemption at approximately $19 a home, $48,621 was shifted onto other properties to make up the difference for the city, Lakeway Communications Director Jarrod Wise said.
The $48,621 is out of approximately $6.61 million in property taxes, or less than 1% of all property taxes.
“So from $5,000 to $15,000, there was not a significant impact on the city,” Oakley said.
According to www.censusreporter.org, around 30%-32% of Lakeway’s population is age 60 or older, which is nearly double the rate of many other Texas towns. Properties with an over age 65 homestead exemption in Lakeway make up about 23% of all residential properties.
What this means, Oakley said, is the tax burden is shifted to around 77% of the other properties in Lakeway.
Homeowners who do not qualify for an over age 65 exemption will likely only see their property taxes raised about $4-$5 annually, she added.
She also said, for properties that do qualify for the over age 65 homestead exemption this year, they will see their rates fall by about $30 annually.
Mayor Pro Tem Gretchen Vance asked if other communities are also doing a homestead exemption for residents over age 65.
Oakley said other towns do have those exemptions, but she believes Lakeway is low in comparison.
Council Member Kelly Brynteson said she is concerned about the effect the proposal would have on the under age 65 population, especially if the decision to raise the over age 65 property tax homestead exemption becomes an annual occurrence.
Council Member Louis Mastrangelo said the actual dollar amount people are asked to give up is very low.
“But I agree, we should be conscious of the fact that, if it grows, we just need to be cognizant of how it affects those under [age] 65,” he said.
Vance said she did not want to see seniors taxed out of their home.
“I don't want to read a newspaper article where seniors had to sell their house because they can’t afford the property tax on it,” she said.
Since the ordinance was adopted by council, Oakley said it would be sent to the appraisal district to make any appropriate changes.