America's Property Tax Advisor

Texas Reforms Help Soften the Blow of Increasing Property Taxes

BY FOY MITCHELL, DALLAS, APRIL 2022

Appraisal notices will be in the mail soon for Texas property owners. While assessed values are up statewide, the property tax reforms passed three years ago are providing some degree of relief from spiraling property tax increases, according to a new report.

 

A study by the Texas Taxpayers and Research Association (TTRA) finds that tax bills may still grow as values rise. However, a 10% increase in appraised value no longer means a tax bill roughly 10% higher. The tax bill will now grow closer to 3-5%.

 

Landmark Legislation

 

In 2019, lawmakers passed House Bill 3 and Senate Bill 2 that enacted major reforms in school finance and local government budgeting practices. These bills constrained the ability of taxing jurisdictions to raise the amount of property taxes they collect without the approval of voters. HB 3 essentially limits school tax growth to 2.5%, while SB 2 limits most other large taxing units to increases of 3.5% without the approval of voters.

 

“As property values rise, jurisdictions are finding they must cut tax rates or face voters,” the report says. “As a result, property tax rates are dropping like never before.”

 

Taxes Keep Increasing

 

Property taxes continue to rise in Texas but at a much slower rate since voters have a greater degree of control over their tax bills than ever before. In 2021, Texas property taxes were a record $73 billion, but had HB 3 and SB 2 not been in effect, tax bills would have tallied $79 billion.

 

The TTRA report finds that property taxes relative to people’s ability to pay, as measured by personal income, has also seen a decline. From 2011 to 2019, property taxes as a percent of Texans’ personal income crept upwards from 3.8% to 4.4%. Over the past three years, that upward trend has been reversed and percentage is now in decline, dropping to 4.2% in 2021. It’s expected to continue to decline over the coming years.

 

More Information Available

 

A new provision of SB 2 gives Texans greater information about their property tax bills with a website. The site gives details about the tax rates jurisdictions propose to adopt and how they will impact the tax bill for a specific property.

 

The time, date, and location of tax rate hearings is also provided. For those who can’t attend public hearings, the webpage includes a link so taxpayers can submit comments on the proposed tax rates by email.