In November 2023, Texas voters overwhelmingly approved Proposition 4, delivering the largest property tax cut in state history. Now that these changes have been in effect, homeowners across Texas are seeing the real-world impact on their tax bills.
The average Texas homeowner saw their property tax bill decrease by 28% in 2024 compared to 2023, representing significant relief after years of steadily increasing property taxes. This substantial reduction came at a critical time, as property values had more than doubled over the past decade, with the median sales price of Texas homes reaching $326,800 in early 2023.
Such dramatic increases in valuations had placed a growing burden on Texas families, particularly those on fixed incomes or in fast-appreciating neighborhoods. Let’s explore how Proposition 4 has reduced your property tax burden and what new relief measures lawmakers are currently debating.
How Proposition 4 Has Transformed Texas Property Taxes
Proposition 4 was designed to address the burden of rising property taxes that had strained Texas homeowners for years. With property values skyrocketing over the past decade, many homeowners saw their tax bills climb to unsustainable levels, especially those on fixed incomes.
1. Increased Homestead Exemption from $40,000 to $100,000
The most significant change for homeowners was the substantial increase in the homestead exemption for school district taxes. This exemption reduces the taxable value of your primary residence by $100,000, meaning a home valued at $300,000 is only taxed as if it were worth $200,000 for school district tax purposes.
This change has been particularly impactful because school district taxes typically represent more than half of a homeowner’s property tax bill. For a property in a school district with a tax rate of 1.2%, this exemption increase translates to approximately $720 in annual savings compared to the previous $40,000 exemption.
2. School Tax Rate Compression
Proposition 4 also compressed school tax rates by 10.7 cents per $100 of property valuation. This rate reduction applies to all property owners, including homeowners and businesses, providing widespread relief.
To illustrate what compression means: If your school district previously charged a tax rate of $1.17 per $100 of property value, the rate would be reduced to approximately $1.06 per $100 after this compression. For a home valued at $300,000, this translates to a savings of about $321 per year ($300,000 × 0.00107 = $321).
The compression essentially “squeezes down” the tax rate across all school districts, ensuring every property owner benefits from a lower rate regardless of where they live.
The combined effect of the increased homestead exemption and rate compression has delivered meaningful savings to property owners across Texas. By lowering both the taxable value and the rate at which that value is taxed, these complementary approaches have worked together to reduce the overall property tax burden for homeowners.
3. Temporary Appraisal Cap for Non-Homestead Properties
Investment properties valued under $5 million received a temporary 20% cap on annual appraisal increases for 2024 through 2026. This measure has helped protect both property owners and tenants from sudden tax increases.
For property investors, this cap has created more predictable expenses and prevented drastic year-over-year tax hikes. This stability benefits both property owners and renters as landlords are less likely to pass on steep tax increases through rent hikes.
4. State Budget Surplus Applied to Property Tax Relief
Proposition 4 allowed the Texas legislature to use state budget surplus funds specifically for property tax relief. These funds have primarily been directed toward lowering school tax rates, which has benefited all property owners.
This approach has effectively used the state’s strong economic performance to reduce the local tax burden. The total relief package allocated $12.7 billion toward property tax reductions, representing one of the largest tax cuts in Texas history.
5. Increased Public Input on Appraisal District Operations
The final component of Proposition 4 converted three members of county appraisal district boards into elected positions. This change has increased public participation in appraisal district operations and made these boards more accountable to the communities they serve.
While less immediately visible in your tax bill than other provisions, this reform has created more transparency in how property values are determined and given property owners more influence in the appraisal process.
New Property Tax Relief Proposals for 2025
Building on the success of Proposition 4, Texas lawmakers are currently debating additional property tax relief measures. The Texas House and Senate have introduced competing proposals to distribute approximately $3.5 billion of the state’s surplus to further reduce property taxes.
Senate Proposal: Further Increasing the Homestead Exemption
The Senate has passed a bill that would raise the homestead exemption from $100,000 to $140,000 (and to $150,000 for seniors). This increase would provide additional relief to homeowners, with an estimated average savings of $363 annually.
According to Lt. Gov Dan Patrick, nearly half of school districts in Texas have an average home value under $140,000, meaning many homeowners in these districts would pay no school property taxes if this proposal becomes law.
House Proposal: Additional Tax Rate Compression
The House is considering a different approach that would reduce school tax rates by an additional 3.31 cents for every $100 of property value collected. This plan would cost approximately $1.4 billion per year and would benefit both homeowners and businesses.
Business leaders generally support this approach as it provides relief across all property types and potentially creates a path toward eliminating school property taxes altogether. However, analysis suggests this method would disproportionately benefit higher-income households.
Business Property Relief
A separate House proposal would increase the personal property tax exemption for businesses from $2,500 to $250,000. This change would primarily benefit small businesses by eliminating taxes on equipment and inventory under this threshold.
What This Means for Your Tax Bill Going Forward
If you’re a Texas homeowner, you’ve likely already seen substantial savings from Proposition 4. If the Senate’s proposal to increase the homestead exemption passes, homeowners could see additional savings of approximately $363 annually. Combined with the tax cuts from 2023, this would result in a total tax reduction of nearly $1,763 for the average homeowner (and $1,933 for seniors).
These changes would be permanent if approved by voters in a constitutional amendment election in November 2025 and would apply retroactively to 2025 tax bills.
How to Maximize Your Property Tax Savings
While these legislative changes have significantly reduced property tax burdens across Texas, it’s important to remember that they apply after your final property value is determined. To maximize your savings, you should take advantage of all available exemptions and actively manage your property’s tax appraised value.
Understanding Available Exemptions
Exemptions directly reduce the taxable value of your property before tax rates are applied. The general homestead exemption is just the beginning—many Texas homeowners qualify for additional exemptions:
- General Homestead Exemption: Currently $100,000 for school district taxes and potentially more for your county or city taxes (varying by location).
- Over-65 Exemption: Seniors receive an additional $10,000 exemption from school taxes in addition to the $100,000, for a total of $110,000. This would increase to $150,000 under the new Senate proposal.
- Disability Exemption: Those who qualify can receive the same additional exemption as seniors (but cannot claim both).
- Veterans Exemptions: Disabled veterans can receive partial or total exemptions based on disability percentage.
- Solar and Wind Energy Exemptions: Installing renewable energy devices may qualify you for additional exemptions in some jurisdictions.
It’s crucial to verify you’ve claimed all exemptions for which you qualify, as they are not automatically applied. You must submit the appropriate application to your county appraisal district.
Beyond Exemptions: The Critical Role of Property Tax Protests
While exemptions provide substantial relief, they only apply after your property’s value has been established. This is where property tax protests become essential—they directly address the base value used to calculate your taxes.
Why Protest Your Property Valuation?
Even with generous exemptions, an inflated property valuation can significantly increase your tax burden. County appraisal districts assess thousands of properties each year, often using mass appraisal techniques that might not accurately reflect your specific property’s condition or value. Common issues that could justify a lower valuation include:
- Property Condition Issues: Foundation problems, roof damage, or outdated systems not accounted for in the appraisal.
- Unequal Appraisal: Your property is valued higher than similar properties in your neighborhood.
- Market Value Discrepancies: The appraised value exceeds what your property would sell for on the open market.
Regardless of whether your tax appraised value seems “reasonable,” a yearly protest ensures that the value is fair in each of these areas.
The Protest Process Timeline
Property tax protests follow a strict timeline in Texas that requires careful attention to deadlines. Understanding this timeline is crucial for successfully navigating the protest process and ensuring you don’t miss your opportunity to challenge your property’s valuation. The process begins in spring when appraisal notices are mailed and continues through summer when hearings take place. Being prepared at each stage can significantly impact your chances of achieving a reduction in your property taxes.
- April-May: You’ll receive your Notice of Appraised Value.
- May 15 (or 30 days after receiving your notice): Deadline to file your protest.
- May-July: Informal hearings with appraisal district staff.
- June-August: Formal Appraisal Review Board hearings if the informal process doesn’t resolve your case.
These dates aren’t flexible, and missing key deadlines means forfeiting your right to protest for the entire tax year. Beyond the protest process itself, the property tax calendar extends through the fall when tax rates are set and into winter when payments are due. Understanding the full cycle helps property owners plan ahead and take advantage of every opportunity to reduce their tax burden.
Compounding Benefits of Annual Protests
A successful protest doesn’t just save you money in the current year—it establishes a lower starting point for next year’s valuation. Even a modest 3-5% reduction can compound over time, especially when combined with the homestead cap that limits value increases to 10% annually.
Many property owners overlook this opportunity, thinking the potential savings aren’t worth the effort. However, the combination of new exemptions from Proposition 4 and a successful protest can dramatically reduce your tax burden for years to come.
Combining Strategic Approaches for Maximum Savings
The most effective way to reduce your property tax burden combines both legislative relief measures and hands-on management of your property’s valuation. This means taking full advantage of Proposition 4’s benefits while also actively pursuing exemptions and filing strategic protests. When implemented together, you benefit from substantial tax reductions through increased homestead exemptions, compressed school tax rates, and a properly challenged property valuation that reflects your home’s true market value.
For Texas homeowners, this combined strategy can yield significant savings over time. By staying informed about legislative changes and actively participating in the annual valuation process, you can ensure you’re not paying more than your fair share in property taxes.
When you’re ready to maximize your property tax savings, Home Tax Shield can handle the entire protest process for you. Our team of local experts utilizes advanced data analysis and in-depth market knowledge to establish the lowest defensible value for your property, providing peace of mind that you’re never paying a dollar more than necessary on your tax bill.