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If you own a home in Texas, your wallet is about to feel a little lighter. Or is it? Property tax changes have swept across the Lone Star State, and the news is complicated. Some folks will save hundreds, maybe even thousands per year. Others are still trying to decode what it all means for their annual tax bills.
It’s a confusing time for Texas homeowners right now. The state pushed through some of the biggest property tax relief measures in its history, yet many people are still watching their bills climb. Let’s be real, nobody likes surprises when January rolls around and that tax notice lands in the mailbox.
Bigger Homestead Exemption Means Real Savings
Texas voters approved constitutional amendments in November 2025 that increase homestead exemptions, providing substantial relief directly to homeowners. The homestead exemption increased from $100,000 to $140,000, which sounds great on paper.
Here’s the thing though. The average Texas homeowner will see a reduction in their property tax bill of nearly $500 when you factor in both the exemption increase and school tax rate compression measures. That’s not pocket change, I’ll admit. For a typical Texas home valued at around $302,000, homeowners would have saved about $490 on their school property taxes had the higher exemption been in place last year.
The relief applies specifically to school district taxes, which form the largest chunk of most property tax bills in Texas. Honestly, it’s about time homeowners caught a break there.
Seniors and Disabled Homeowners Get Even More Relief
If you’re 65 or older, or living with a disability, the changes get even better. The exemption for those age 65 and older or with disabilities jumped from $110,000 to $160,000, or a total of $200,000 combined with the standard homestead exemption. That’s substantial.
Older or disabled homeowners will see annual savings of around $454, but combined with the first homestead exemption and school tax rate compression, homeowners age 65 and older could receive about $939 in property tax savings every year. For people on fixed incomes, that difference can mean staying in their homes versus being forced out by rising costs.
Four hundred ninety-two school districts have an average home value under $140,000, meaning school property taxes will be eliminated for the average homeowner in those districts. Nearly half of Texas school districts fall into that category. Let’s just say, some seniors won’t be paying school taxes anymore.
When Do These Changes Actually Take Effect
The amendments take effect for the tax year beginning January 1, 2026, which means homeowners should start seeing these savings reflected in their 2026 property tax bills. The timing matters because many people won’t notice the relief until their bills arrive later in the year.
Homeowners who escrow for taxes with their lender may not feel the tax reduction in terms of monthly payment until next year, when their escrow account will be reanalyzed. So if you’re expecting an immediate drop in your mortgage payment, you might need to wait a bit longer.
It’s hard to say for sure, but the lag between approval and actual implementation can leave people frustrated when they don’t see instant results.
Why Are Property Values Still Driving Bills Higher
Let’s be honest about what’s happening beneath the surface. Rising property values and updated appraisals are the real culprits, and as real estate prices increase across the state, especially in urban and growing suburban areas, assessed values rise, leading to higher tax bills.
Here’s the kicker: even with these new exemptions, your property tax bill can still go up if your home’s value climbs faster than the exemption offsets it. Your property tax bill increases even if the tax rates don’t change because local appraisal districts reassess property values every year.
Local governments may also approve additional bonds or budget increases for schools, roads, or public services, which can cause taxes to go up even without a rate change. It’s frustrating, I know.
Business Owners Catch a Break Too
Homeowners aren’t the only ones benefiting from the changes. House Bill 9 proposes exempting up to $125,000 of business personal property from taxation by any taxing entity, including taxation by school districts, cities, and counties.
This will save the average business about $2,500 a year. Small businesses have been squeezed by rising costs just like homeowners, so this exemption could provide some breathing room.
The business relief is part of a broader strategy to keep Texas competitive and attractive for entrepreneurs. Whether that translates into job growth or lower consumer prices remains to be seen.
Caps and Limits Protect Against Sudden Spikes
The homestead cap limits taxable value increases to 10% annually for primary residences, which acts as a safety net when home values surge unexpectedly. A new circuit breaker limitation caps non-homestead properties at 20% increases through 2026, offering similar protection to rental properties and commercial buildings valued under $5 million.
These caps work independently of market value fluctuations, meaning your tax bill won’t skyrocket even if your neighbor’s house sells for twice what they paid. It’s not a perfect system, but it does prevent the worst-case scenarios.
Honestly, without these limits, some homeowners in fast-growing areas like Austin or Dallas would be facing financial disaster.
Disaster Relief and New Restrictions on Tax Hikes
Senate Bill 1502 would prohibit school districts from raising property taxes in the years following a disaster if voters approve it. School districts wanting to raise taxes following a disaster would need to hold a Tax Ratification Election, giving property owners a say in the decision.
This provision addresses a real concern after events like Hurricane Beryl, when local governments tried to hike property taxes to cover recovery costs. People who’ve already lost so much don’t need surprise tax increases on top of everything else.
It provides predictability during some of the hardest times homeowners might face.
The State Budget Will Feel the Strain
Because the tax breaks are now embedded in the state’s constitution, lawmakers would have to trim other parts of the state budget should coffers come up short, including other tax cuts that aren’t guaranteed by the Constitution. Some budget watchers warn Texas won’t be able to afford these cuts if the state’s economy experiences a significant slowdown.
These tax changes benefit homeowners in the short term but could increase long-term pressure on the state’s finances, and if economic conditions tighten or revenue growth slows in the future, maintaining current levels of school funding could become more difficult.
The state is essentially betting on continued economic growth to fund these exemptions. If that bet doesn’t pay off, schools and public services could face serious cuts down the road.
Future Property Tax Relief Already on the Table
Lt. Gov. Dan Patrick has proposed further increases to the homestead exemption during the 2027 legislative session.
Lt. Gov. Dan Patrick has stated that property taxes cannot be totally eliminated. That’s an ambitious claim, and whether it’s realistic is another question entirely.
Eliminating school property taxes entirely would require massive changes to how Texas funds education. Critics argue it’s politically popular but fiscally irresponsible.
Renters Left Out of the Tax Relief
Left out of lawmakers’ tax-cut efforts are the state’s 9.8 million renters, and unlike homeowners and businesses, state lawmakers didn’t send direct tax relief to renters. Tax-cut proponents argue renters benefit indirectly from cuts to school tax rates, but that’s a hard sell.
Let’s be real here. Landlords aren’t required to pass property tax savings on to tenants in the form of lower rent. In practice, renters might not see any benefit at all from these changes.
It’s a glaring gap in the relief package, especially in a state where nearly one in three households rents rather than owns.
How to Make Sure You’re Getting Every Exemption
Successfully protesting your home’s assessed value, qualifying for additional exemptions like the homestead exemption or over-65 freeze, or benefiting from a local reduction in the tax rate can all reduce your property tax bill, and staying informed during appraisal season and reviewing your notice carefully each year can help you find opportunities to lower your property taxes.
Contact your local appraisal district to ensure you’re receiving all the exemptions you’re eligible for. Many homeowners miss out on savings simply because they didn’t file the right paperwork.
It takes some effort, but protesting your property valuation can result in significant savings if your home was overvalued. Don’t just accept the number they give you.
Texas homeowners are navigating a complex landscape of property tax changes that promise relief but don’t eliminate every frustration. The exemptions are real and substantial for many, particularly seniors and those with modest home values. Yet rising property values and the potential for future budget shortfalls mean the story isn’t over. Will these changes truly ease the burden long-term, or are they just a temporary Band-Aid on a much bigger problem? What do you think will happen when the next economic downturn hits?
Besides founding Festivaltopia, Luca is the co founder of trib, an art and fashion collectiv you find on several regional events and online. Also he is part of the management board at HORiZONTE, a group travel provider in Germany.
