Jeff Angelo, a Montgomery County resident and owner of the Hodge Podge Lodge, said he saw appraisal increases on all his properties.

Between 2021-22, Angelo said the appraisal on his commercial property went from $361,350 to $2.4 million—before working with a third party to protest and litigate it down to $1.08 million. Meanwhile, Angelo said his residential property’s 2021 appraisal of $682,000 more than doubled in 2022 before a protest and lawsuit brought it down to $823,000.

“It was everywhere,” Angelo said. “Every property we had in Montgomery County was affected by it.”

Angelo is among the Montgomery County homeowners and business owners who could see property tax relief after state legislators approved a plan to address property tax increases in mid-July, closing out the second special session of the year.

“Right now, there is no cap on commercial property,” state Rep. Will Metcalf, R-Conroe, said during a Sept. 20 presentation to the Montgomery Area Chamber of Commerce. “With this bill, [commercial property] can still go up 300%, but you’re only going to be paying taxes on the 20%.”

The overview

With the state’s plan, Lt. Gov. Dan Patrick said the average homeowner would save $1,250-$1,450 on their 2023 tax bill while commercial property owners would see a 20% nonhomestead appraisal cap if the value of their property is less than $5 million.

“If passed by voters this fall, Texas homestead exemptions [for school district taxes] will rise to $100,000; senior homeowners will be protected from being priced out of their home; the small-business exemption for the franchise tax will double; and Texas small businesses will be protected from excessive appraisal increases,” Gov. Greg Abbott said in an Aug. 9 news release after signing off on the plan.

The $18 billion package includes two bills—Senate Bills 2 and 3—and a constitutional amendment. For the tax cuts to show up on this year’s tax bill, Texans must approve the constitutional amendment, Proposition 4, on the Nov. 7 ballot. Homeowners would also need to apply to receive the homestead exemption.

The property tax relief comes as Montgomery County property owners are seeing value increases. Between 2019-23, the average market value of homesteaded properties—those who have applied for a homestead exemption—within Conroe ISD’s boundaries increased by 44.4%, according to the Montgomery Central Appraisal District.

What else?

If Proposition 4 passes, the homestead exemption will be raised, and homeowners will pay reduced taxes to their local school districts.
  • ISD tax rates will decrease by $0.107.
  • The state will distribute $12.7 billion to schools.
  • For a $300,000 home, decreasing the school district tax rate by $0.107 would cut an average tax bill by $321.
The plan also includes a nonhomestead appraisal cap, which would limit annual value increases for certain properties if Proposition 4 passes.
  • The value of property worth $5 million or less cannot increase by more than 20% year over year.
  • This applies to all nonhomestead property, such as second homes and commercial property.
  • Approximately 13 million properties will qualify.
As part of the new law, SB 3 also amends the state business franchise tax, which all businesses currently pay based on individual circumstances.
  • Businesses that make less than $2.47 million annually will no longer have to pay the tax.
  • Roughly 67,000 small and midsize businesses will be exempt from the tax.
  • Collectively, qualifying business owners will save around $300,000 each year.
While lawmakers widely supported the legislation, some in opposition fought for relief for renters. State Sen. Paul Bettencourt, R-Houston, argued that landlords who receive tax relief would pass the savings on to renters, but Dick Lavine, a senior fiscal analyst for the progressive advocacy group Every Texan, said the legislation does “nothing for [renters] at all.”

Why it matters

Rising home appraisals is a trend in Montgomery County. Between 2019-23, the average market value of homesteaded properties within the boundaries of Montgomery and Willis ISDs rose by 54.47% and 55.38%, respectively.

Meanwhile, 93% of commercial properties in the county fall under the $5 million threshold for the nonhomestead appraisal cap, which is a three-year pilot plan, Metcalf said.

“We took care of a lot of good people with that bill,” he said.
What they're saying
  • "We must balance the needs of government with the limits of a taxpayer’s wallet," State Sen. Lois Kolkhorst, R-Brenham, said.
  • "The signing of this Texas-sized tax cut, the biggest property tax cut in history, is a massive victory for all 5.7 million Texas homeowners," Lt. Gov. Dan Patrick said.
  • “Forty percent of [Texans] rent. ... They often live month to month on their salaries. ... We are specifically leaving out 40% of this state," State Rep. Gene Wu, D-Houston, said.
What's next

Three Democratic state representatives, including Ron Reynolds, D-Missouri City, released a statement condemning Republicans for providing more tax relief to certain groups.

“Texas Democrats fought hard for the millions of Texans who rent, who are teachers or who send their children to public schools, but they were entirely neglected in the process by Republican leadership,” the statement said.

School districts will receive state funds to offset lower property tax revenue, but overall school funding will not change.