In the final hours of the Texas Legislature’s Third Special Session, lawmakers approved a proposed constitutional amendment to give homeowners a tax break.
If voters approve the measure next year, it will raise the state’s homestead exemption from $25,000 to $40,000 for school district property taxes.
By lowering the residential real estate tax, it will transfer more of the property tax burden to business and industry.
The new tax proposal, which will cost the state more than $600 million annually if approved in May, emerged just hours before the end of the Third Special Session.
With the House and Senate unable to reach agreement on a bill to reduce property tax rates, lawmakers started from scratch on new legislation intended to lower homeowners’ property tax bills though an expansion of school district homestead exemptions.
The tax relief will be paid for in the first year out of the state’s $4.4 billion surplus. But it wasn’t immediately clear how the state would pay for the tax cut in the future.
The two chambers could not reach a final compromise of the Senate’s $2 billion tax-cut bill that would temporarily reduce school property taxes.
The version in the House proposed sending $525 checks to homeowners – paid for with $3 billion out of the federal American Rescue Plan Act, the $1.9 trillion stimulus bill intended for pandemic relief. That plan drew criticism for excluding renters and perhaps breaking a federal rule that bans the use of stimulus dollars for tax cuts.