The exemption for people who are over age 65 and/or disabled is used by the city to alleviate some of the property tax burden, according to city officials. The tax break is designed to be about 30% of the average value of a senior's house in the city.
Richardson Mayor Paul Voelker said the current exemption is the best way to reward senior citizens, even more than a tax freeze, because it is more financially beneficial to those who need it.
“At the end of the day, we want to protect those with fixed incomes and may be living in a home where taxes can be more than rent somewhere else,” Voelker said at the meeting.
City officials said the average market value of a senior’s home is $404,829. At the $130,000 exemption, seniors across the city would collectively save more than $6.2 million in taxes.
Keith Dagen, director of finance for the city of Richardson, said the increase will provide a more than 31% estimated tax benefit on the average value of a senior's home for fiscal year 2023-24. The $25,000 increase from the previous year to the exemption would cut an additional $140 from tax bills annually for each eligible household.
“This is great for seniors,” Council Member Jennifer Justice said at the meeting. “It definitely provides some relief, especially given how the market has gone in recent years.”
The current $105,000 exemption was estimated to have generated less than a 26% tax value on the average for FY 2022-23, according to a presentation to council by Dagen. At the current tax rate of $0.56095 per $100 property valuation, the current exemption would equal a $589 tax reduction per senior. No change to the exemption amount for FY 2023-24 would have projected total city exempted taxes at over $5 million, assuming a 3% home value growth and a 1% increase in residents using the exemption.
The proposed exemption increase cost to the city is estimated to be over $1.3 million. The city plans to accommodate the increase through the general fund and debt services, according to Dagen.
For FY 2021-22, the exemption was $105,000 per home. The exemption increased from $85,000 to $100,000 starting with FY 2019-20 before growing ahead of FY 2022-23.
An increase in the exemption must be approved before July 1 to be effective for FY 2023-24. The exemption is scheduled to be discussed by council at its Feb. 13 regular meeting.
