Ending school property taxes for homeowners would cost Texas nearly $9B per year, officials say

Some Texas Republican leaders have vowed to get rid of the property taxes that homeowners pay to their local public school districts. Doing so would cost the state about $8.6 billion per year, on top of the $51 billion dedicated to property tax relief in the 2026-27 state budget.

What you need to know

Texas school districts collect about $29 billion per year in maintenance and operations taxes, which cover schools' daily expenses, according to the Texas Legislative Budget Board.

Of that $29 billion in school tax revenue, about $8.6 billion is paid by homeowners, according to Tetyana Melnyk, chief revenue estimator for the state comptroller's office. The remaining revenue comes from commercial and industrial property taxes.

This means the state would need to spend at least $8.6 billion annually to zero out homeowners' school property tax bills. That cost is expected to grow to $12 billion per year by 2032, Melnyk told the House Ways and Means Committee, which handles policies related to property taxes and changes in state revenue.

"As we're addressing the property tax issue, when I hear [about] elimination, potentially, of the school piece of it, that sounds good, but wouldn't that be harmful to our schools?" state Rep. Barbara Gervin-Hawkins, D-San Antonio, asked Texas Education Commissioner Mike Morath during the committee's Sept. 15 hearing.

How the state handles local property taxes and public school funding is "fundamentally a financial policy question of the legislature," Morath said Sept. 15.

"Broadly speaking, you have a question about how much you want to fund schools, and then separately, where does that money come from?" Morath said. "Does it come from sales tax, from oil and gas, from the [state] lottery, from property taxes, from all of the above? So, if you have a target of how much you want to spend, you need to make sure you have enough variable revenue sources to reach that."

How it works

Texas had the nation’s seventh-highest overall property tax rate—1.4%—in 2024, according to the latest data from the Tax Foundation, a right-leaning think tank based in Washington, D.C.

The state of Texas does not charge property taxes, meaning homeowners are taxed by local entities such as school districts, cities, counties, hospital districts and municipal utility districts. School maintenance and operations taxes are the largest piece of a homeowner's property tax bill, and state lawmakers have worked to reduce that cost in recent years.

Policies passed during the 2025 legislative session and approved by Texas voters exempt most homeowners from paying school district taxes on the first $140,000 of their home's value, known as the state homestead exemption. Seniors and people with disabilities receive a $200,000 homestead exemption, per previous Community Impact reporting.

When local property taxes are reduced through state action, the state is required to give school districts money to ensure they do not lose revenue as a result of the lower taxes. Texas is spending $51 billion on property tax relief for fiscal years 2026 and 2027, making up about 15% of the state's $338 billion budget, previous Community Impact reporting shows.

Unless the legislature rolls back existing tax exemptions, the state will be required to spend that much or more on tax relief in every two-year budget, lawmakers have said.

Lawmakers had a nearly $33 billion budget surplus to pull from when writing the 2024-25 state budget, and a roughly $24 billion surplus for the 2026-27 budget, Community Impact reported.

Budget analysts have warned that fewer surplus dollars will be available in future years—and this summer, Gov. Greg Abbott and legislative leaders directed nearly all state agencies to reduce their base budget requests by 3% for the 2028-29 biennium. The reductions are necessary to "maintain Texas’ strong fiscal position" and address affordability issues for residents, leaders said.

Abbott previously said that surpluses and "cautious" budgeting allowed Texas to spend $51 billion on tax relief, noting last June that the state has "some other reserve money to make sure that we will be able to continue to maintain the property tax relief in the future."

"The governor has been clear that he wants to eliminate school district property taxes for Texas homeowners and have the state assume the full cost of replacing that revenue," Eduardo Leal, Abbott's campaign press secretary, said in a Sept. 17 statement to Community Impact. "Texas has already demonstrated that the state can take on a greater share of education funding while driving down local school property tax bills."

More details

Among other affordability-related priorities, Abbott has campaigned for reelection on a plan to eliminate school property taxes, telling supporters at a Nov. 9 campaign kickoff event last fall that school taxes were "out of control."

Texas' property tax laws are enshrined in the state Constitution, meaning such a proposal would require support from at least two-thirds of state lawmakers as well as a majority of Texas voters.

Last year, some proposed constitutional amendments backed by Abbott failed due to opposition from House Democrats, who currently have 62 members to House Republicans’ 88. The state legislature meets for 140 days every two years, with the 2027 regular legislative session scheduled to begin in mid-January.