What is a homestead exemption?
Exemptions allow homeowners to save on property tax bills. An exemption includes withheld value and a homestead cap.
Withheld value
A homestead exemption removes some or all of a home’s value from being taxed. School districts must offer a $40,000 exemption, and other entities may exempt up to 20% of a home’s value.
For instance, a home appraised at $700,000 had to pay Frisco ISD $8,870.40 in taxes last year. With a homestead exemption, however, that bill to FISD could change to $8,363.52—a savings of $506.88.
Homestead cap
In addition, a homestead exemption limits the increase of your appraised property value to 10% annually, so long as no additional improvements or extensive renovations are made to the property.
For instance, if a home without an exemption were appraised at $700,000 in 2021 and $840,000 in 2022—a 20% increase—then $840,000 is the amount by which tax bills would be calculated for that homeowner. However, with a homestead exemption, the 2022 increase would be capped at 10%, or $770,000, lowering the taxable value of the home by $70,000.
Types of homestead exemptions
Various homestead exemptions are available to Texan homeowners.
General residence, the most common and easiest exemption to get, is for a homeowner’s primary residence.
Age 65 or older exemption gives an additional $10,000 off for school districts in addition to the $40,000 general residence exemption. This exemption also freezes school district taxes.
Disabled persons and veterans exemptions vary but can equal up to 100% of a home’s value from all taxing entities.
Spouses of persons killed in line of duty exemptions can withhold 100% of a home’s value from taxation, so long as the surviving spouse has not remarried.
Local exemptions
The following general exemptions exist for Frisco homeowners. Appraisal districts can provide a comprehensive list.
School district exemptions
Frisco ISD: $40,000 off home's value
City exemptions
Frisco: 12.5% off home's value (as of the 2022-23 fiscal year)
County exemptions
Collin County: 5% off home's value
Denton County: 1% off home's value
Texas law changes
Two recent law changes benefit new and longtime homeowners’ property tax bills by allowing homeowners to acquire exemptions earlier and increasing how much value is withheld.
Texas Tax Code change
Before, homeowners had to wait until Jan. 1 of the following year •they purchased the home to claim a homestead exemption. They would not see a cap on their property appraisal until Jan. 1 after the year they bought their home.
Now, as of Jan. 1, 2022, a qualified homeowner can claim a homestead exemption as of the date they own and occupy the property so long as the previous owner did not claim a homestead exemption in the same year. The change allows homeowners to benefit from a homestead exemption, including the cap, earlier.
Note: If residents who purchased a home in 2021 have been granted a homestead exemption this year, they will see withheld value from various taxing entities in 2022, but their homestead value will not be capped at 10% growth until 2023.
State proposition 1 & 2
Before, the homestead exemption for each school district across the state was $25,000.
Now, Texas residents voted in May in favor of a proposition•upping the school district exemption to $40,000. Texas voters also approved a separate proposition to potentially reduce tax rates for school maintenance and operations for homeowners with a 65 or older or veteran exemption.
