Chief Financial Officer Mark Holloway presented data showing the effect of increasing the exemption for people eligible and not eligible at a work session June 21. According to a presentation at the work session, for every $5,000 increase in the homestead exemption, eligible homeowners will pay $25 less in taxes at the current tax rate, and noneligible homeowners will pay $2.80 more in taxes given the current tax rate. The city's current tax rate is $0.497655 per $100 valuation.
After the presentation, City Council members evaluated the potential increase between either $10,000 or $15,000. Council members such as Patrick Cloutier and Geré Feltus shared their thoughts on increasing the exemption.
"I just want to be mindful that there are other sectors of this community that are already feeling the toils of the inflation that we are living in right now, so we don't want to overly burden them," Feltus said.
Homestead exemptions allow Texas homeowners to save money on their property tax bills. Exemptions lower the property value used to calculate property taxes owed. Different Collin County cities' homestead exemptions were presented to the council during the work session to compare to McKinney's exemptions. For reference, the current homestead market value preliminary average in McKinney is $492,000, according to the presentation. Without the exemption, the average homestead would pay $2,448.46 in yearly property taxes to the city. With the newly approved 65 and older and/or disabled exemption, the tax on the average home would be $2,050.34. The $80,000 exemption reduced taxes by $398.12 at the current tax rate.
The last homestead exemption increase for 65 and over/disabled occurred in 2018 from $60,000 to $65,000. The exemption will go into effect on Oct. 1 for the 2022-23 fiscal year.
