Texas homeowners had reason to celebrate last week as the state Senate unanimously approved a bill to raise the school property tax homestead exemption from $100,000 to $140,000. This measure aims to provide much-needed relief to property owners who have seen some of the steepest tax increases in the country.
Senior homeowners, in particular, stand to benefit the most. If the House concurs and voters approve the required constitutional amendment, seniors’ exemptions would rise to $150,000. This increase could significantly reduce the tax burden on older Texans, many of whom live on fixed incomes and struggle to keep up with rising costs.
The structure of this tax relief is considered one of the fairest approaches. The exemption is a fixed-dollar amount, meaning all homeowners benefit, but lower-value homes receive a proportionally larger tax break. For example, a 70-year-old homeowner with a house valued at $150,000 would owe nothing in school maintenance and operation (M&O) taxes, as the exemption would fully cover the property’s value. Meanwhile, a senior homeowner with a $1 million home would still pay school M&O taxes on $850,000 of the property’s value.
While this tax break is good news for homeowners, the job isn’t done. Lawmakers must also address relief for renters, who bear the weight of property taxes in a different way.
Renters Are Left Out of the Tax Relief
While homeowners get a direct reduction in their school property tax bill, renters have been left out of this relief effort. Though tenants do not pay property taxes directly, they still bear the financial burden. Landlords factor property taxes into rental prices, meaning higher taxes lead to higher rent.
In written testimony to lawmakers, the Texas Apartment Association emphasized that property taxes are “among the single largest expenses for rental housing owners in Texas.” This cost is inevitably passed down to renters, making housing even more expensive.
Despite these facts, renters received no benefit from the previous round of property tax cuts in 2023. This is especially concerning given that more than one-third of Texas households are renters. In major metropolitan areas like Dallas, Austin, and Houston, fewer than half of residents own their homes. Many Texans aspire to homeownership, but skyrocketing rent prices, rising property values, and limited housing inventory have made that goal increasingly difficult to reach.
While apartment rent increases have slowed, the financial strain remains. In 2023, half of all Texas tenants spent at least one-third of their income on rent and utilities. For many, saving for a down payment on a home remains out of reach, especially with high interest rates continuing to make homeownership more expensive.
During the 2023 legislative session, some lawmakers proposed giving renters relief through tax credits. One idea was to allow tenants to claim a state tax refund based on a percentage of their annual rent payments. Another proposal, introduced by Sen. Royce West, D-Dallas, suggested reducing the state sales tax rate from 6.25% to 5.75%. This would have spread the benefits of Texas’ record budget surplus to all residents, not just property owners.
It’s time for lawmakers to revisit these ideas and explore other measures to help renters. If the state continues to focus solely on homeowners, many Texans may find themselves permanently stuck in their current housing situations, unable to save enough to buy a home. A well-balanced tax policy should include relief for all residents, whether they own or rent.
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