The city of Richardson proposed amending its senior tax exemption during a City Council work session Jan. 31.

The exemption for people who are over age 65 and/or disabled is used by the city to alleviate the some of the property tax burden by offering a tax break of about 30% of the average value of a senior's house in the city.

Richardson Mayor Paul Voelker said he prefers how Richardson uses tax benefits to aid seniors compared with the tax freeze option, which is used by many cities across Texas.

"I like the way that we handle it because, regardless of context, it spreads [the funds] across the board," Voelker said. "Those who have a $1 million home and those with a $300,000 home are getting the same benefits. On top of that, the tax exemption will create a bigger impact for those who really need it."

City Manager Dan Johnson said the exemption also allows the city to be flexible in case of a "permanent and irreversible situation."

In looking to the future, city officials said they fear their current standards will be below the current 30% threshold by as early as next year. The current $100,000 exemption is estimated to generate less than a 30% tax benefit on the average value for the 2022-23 fiscal year, according to a presentation to council by Keith Dagen, director of finance for the city of Richardson. This estimate assumes a 5% growth in home value and a 2% increase in users.

City staff recommends increasing the exemption to $105,000 per household. This increase will provide a more than 31% estimated tax benefit on the average value of a senior's home for 2022-23. The $5,000 increase to the exemption would cut nearly $31 from tax bills for each participant.

At this estimate, seniors across the city would save more than $5.7 million in taxes with the proposed change totaling more than $270,000 of that.

For the 2021-22 fiscal year, the exemption was $100,000 per home. The exemption increased from $85,000 to $100,000 starting with fiscal year 2019-20.

The exemption amounted to more than 31% of the average market value of a senior’s home in 2021, according to the city presentation. Dagen said 30.5% of all residential homes in Richardson receive the exemption, and that total has grown by nearly 2% annually over the last five years.

Average market value of a senior’s home during 2021-22 increased by more than 2.5%, according to the presentation. At the city’s current tax rate, the current exemption equals a $615.16 reduction to the tax bill for each participating homeowner.

An increase in the exemption must be approved before July 1, 2022, to be effective for the 2022-23 fiscal year. The exemption is scheduled to be discussed for renewal by council at its Feb. 28 regular meeting.