Per Houston Association of Realtors data, property values have increased at least 17% since 2019 across each of the six ZIP codes that comprise Community Impact’s Lake Houston coverage area.
But relief is on the way as Texas lawmakers approved an $18 billion plan this summer that Lt. Gov. Dan Patrick said would save the average homeowner $1,250-$1,450 on their 2023 tax bill.
What you need to know
Despite entities, such as Humble ISD and the city of Humble, lowering property tax rates in recent years, property appraisal increases have resulted in higher tax bills for local homeowners.
State legislators approved a plan to address property tax increases in mid-July, closing out the second special session of the year.
“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, in November. Homeowners would also need to apply to receive the homestead exemption.
This tax relief comes after back-to-back years of what Harris Central Appraisal District officials called “unprecedented” property value increases. The average homeowner saw 23.3% and 17.3% market value increases in 2022 and 2023, respectively, following 8.9% and 10.4% increases in 2020 and 2021, respectively.
This has been a trend across the Lake Houston area. Based on a random sampling of homes on the market in August, homes built between 1975-2017 and in neighborhoods such as Bear Branch Village and Balmoral all experienced double-digit value increases since 2019.
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 10.7 cents.
- The state will distribute $12.7 billion to schools.
- For a $300,000 home, decreasing the school district tax rate by 10.7 cents would cut an average tax bill by $321.
- The value of a 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.
- 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.
What they're saying
Patrick touted the state’s property tax relief plan in a statement included in an Aug. 9 news release from Abbott’s office.
“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,” Patrick said.
However, state Rep. Gene Wu, D-Houston, criticized the plan, alleging it fails to provide relief for a large portion of the state’s population.
“Forty percent of [Texans] rent. ... They often live month to month on their salaries. ... We are specifically leaving out 40% of this state," Wu said.
What's next
After the legislation was approved, three Democratic state representatives released a statement condemning Republicans for providing more tax relief to certain groups.
While school districts will receive state funds to offset lower property tax revenue, overall school funding will not change. Lawmakers are expected to return to the Capitol this fall to discuss school funding, Patrick said.
