A Positive Shift: Texas Initiates Property Tax Reform for the Benefit of Homeowners and Businesses
Texan homeowners and businesses are on the brink of a significant shift in their property tax landscape, thanks to the resounding approval of Proposition 4. This constitutional amendment, specifically targeting the revamping of public school funding, received an overwhelming 84% endorsement from voters.
The core of Proposition 4 entails a substantial injection of $7.1 billion in state funding to school districts, with the primary objective of slashing property tax rates. The anticipated outcome is a noteworthy reduction of 10.7 cents for every $100 of property value. Homeowners stand to gain further as the homestead exemption on school district taxes sees a significant uptick, soaring from $40,000 to $100,000. For the average Texan homeowner, this translates to over $2,500 in projected tax savings over the next two years.
Despite Texas being hailed as a low-tax state, the burden of hefty property tax bills has long plagued landowners. Proposition 4’s triumph is a major win for Republican lawmakers and is made possible by Texas’ robust economic growth and a surplus of federal COVID-19 relief funds.
Beyond the realm of property tax reductions, Proposition 4 introduces a novel cap on the annual growth of property values for specific businesses. Properties, including commercial, mineral, and residential, valued at less than $5 million will be subject to a 20% cap on their value growth over the next three years. This strategic move aims to instill stability and predictability for businesses operating in Texas.
In addition to these measures, Proposition 4 extends the exemption from the state’s franchise tax to a broader spectrum of businesses. It also empowers voters in counties boasting at least 75,000 residents to democratically select three new members for their local appraisal district’s board of directors, formerly appointed positions. This multifaceted approach seeks to address longstanding concerns over high property tax bills, marking a transformative moment in Texas’ tax landscape.
