Property taxes aren’t just expensive in Texas—they can also be complicated. Virtually every home in the state is subject to some combination of city, county, and school district levies, each of which is calculated at a different rate based on your county and jurisdiction. Each residential property is also individually appraised based on its market value.
Measures like property tax protests are a great start for homeowners fighting for lower property tax bills. Residents are also entitled to a number of Texas property tax exemptions. These exemptions can reduce your taxable property value, resulting in a lower annual property tax bill.
Depending on your property and ownership status, you may qualify for different property tax exemptions that lower your taxes across different levies. However, most of these exemptions don’t automatically get applied to your property. Instead, you must be familiar with them and apply for those for which you qualify. Use this guide to start filing for your exemptions and using tax protests to lower your tax bills as much as possible.
What Are Texas Property Tax Exemptions?
A property tax exemption is a legal mechanism for removing some or all of a property owner’s legal obligation to pay certain property taxes. They’re established by the state in the Texas Property Code but are managed and implemented at the county level. County and city governments also have some discretion for supplementing exemptions with additional benefits.
Three key benefits that Texas property tax exemptions can offer include:
- A line-item discount: Exemptions often remove a flat dollar value from your home’s appraisal when calculating different levies. For example, a general residence homestead exemption removes $100,000 from your home’s appraised value when calculating school district taxes (but not city, county, or college taxes).
For example, a general residence homestead exemption removes $100,000 from school district tax calculations (but not city, county, or college taxes).
- A tax cap: Some exemptions “cap” how much your property taxes can go up annually. For example, over-65 exemptions directly cap school district tax payments for seniors who have qualified for the exemption, while homestead exemptions cap how much your home’s taxable value can increase each year.
- Additional miscellaneous benefits, such as allowing you to defer taxes or changing how your taxes are calculated.
How Do You Apply For an Exemption?
Homeowners must apply for their property tax exemptions. They aren’t automatically instated by the government in most instances (though many counties will automatically apply the over-65 exemption if you have the homestead exemption).
To apply for an exemption, download or request the appropriate form and fill it in with personal details about your property. You might also need to provide specific documentation, such as proof when applying for a disabled resident exemption or agricultural exemption.
Once you send the information to the right contact in your appraisal district office, you’ll be informed if it’s successful or if you’re not qualified. You can also check your property profile by visiting your local appraisal district’s website.
In contrast to protesting your taxes, most exemptions require a one-time application and remain in effect unless the property owner’s qualifications change or the chief appraiser requests a new application. However, it’s possible for you to become ineligible for some exemptions, such as if you turn your primary residence into a rental property or no longer qualify for disability benefits.
Losing And Monitoring Your Exemptions
Texas property tax exemptions can be lost for a few reasons. Some of the most common reasons include:
- Change in ownership: If the property changes ownership through a sale, transfer, or inheritance, the new owner must reapply for the exemption. The exemption does not automatically transfer to the new owner.
- Change in the property’s use: If the property is no longer used for the purpose that qualified it for the exemption, the exemption may be lost. For example, if a property receiving an agricultural exemption is no longer used for agricultural purposes, the exemption will be removed.
- Change in the owner’s primary residence: If a homeowner claims a homestead exemption and then moves to a new primary residence, they will lose the exemption on the previous property.
- Failure to provide required information: If the chief appraiser requests additional information or a new application to verify eligibility for an exemption and the property owner fails to provide the requested information, the exemption may be lost.
Related: 5 Strategies for an Effective Property Tax Protest in Texas
Monitoring your exemptions is important, as the county can sometimes make mistakes. State law allows counties to retroactively fix mistakes in some cases, so you must monitor these tax-saving exemptions every year to be sure you’re saving the most on your property taxes.
What Types of Exemptions Are Available?
There are several Texas property tax exemptions, and you may qualify for none, one, or several. The biggest and most common exemption for homeowners is the general residence homestead exemption. You may simultaneously qualify for an over-65 exemption or apply an agricultural exemption to the non-homestead portion of a larger farm.
Homestead Exemption
A general residence homestead exemption is available for primary residents who own a home in Texas—if you own the home and live in it, you likely qualify. This exemption offers some key benefits:
- School district tax exemption of $100,000: Tax assessors remove $100,000 of your home’s value when calculating this tax. For example, if you have a $350,000 home, you only pay school district taxes as if it were $250,000. In most areas, the school district tax is at least 1%, so this can result in at least $1,000 saved every year.
- 10% value increase cap: Your home’s assessed value cannot increase by more than 10% any given year (though this cap doesn’t apply to increases caused by renovations or property upgrades, and it goes into effect only after you’ve lived in the home for one full calendar year). This makes your property taxes more predictable. However, it’s important to note that this cap only applies to your taxable value, not your recorded market or appraisal value.
- Additional exemptions: Your taxing unit may offer
- an additional exemption of up to 20% of your home’s value (and no less than $5,000)
- a $3,000 exemption for farm-to-market road or flood control taxes.
Over-65 Exemption
An over-65 exemption is available to property owners the year they become 65. If a homeowner has this exemption and passes away, their spouse (if they are 55 years or older) can continue receiving the exemption. This exemption can transfer if you move to a different home in Texas.
The over-65 exemption benefits are as follows:
- Homeowners age 65 or older qualify for a $10,000 residence exemption for school taxes in addition to the $100,000 exemption from the homestead exemption. If the owner qualifies for both the $10,000 over-65 exemption and the $10,000 disabled-person exemption, they must choose one or the other for school taxes. The homeowner cannot receive both.
- Any taxing unit may offer an additional exemption of at least $3,000 for taxpayers who are age 65 or older or disabled.
- This exemption also limits (caps) the amount of school district taxes you will pay every year to the amount you paid the first or second year you qualified (whichever is lower). This tax ceiling, or tax freeze, on school district taxes will apply as long as no value-adding improvements are made to your home.
Disabled Person Exemption
As part of Texas property tax exemptions, any homeowner who meets the Social Security Administration’s standards for a disability is eligible. To receive this exemption, a person has to have a medically determinable physical or mental impairment that prevents them from engaging in any substantial gainful activity, and the impairment is expected to last for at least 12 months or result in death.
A person who receives disability benefits under the Federal Old Age, Survivors, and Disability Insurance Program could qualify. If a homeowner has this exemption and passes away, their spouse (if they are 55 years or older) can continue the exemption.
The disability exemption benefits are as follows:
- Disabled residence owners qualify for a $10,000 exemption for school taxes in addition to the $100,000 exemption for all homeowners. As stated above, this doesn’t stack with the over-65 exemption.
- Any taxing unit may offer an additional exemption of at least $3,000 for taxpayers who are 65 or older and disabled.
- This exemption limits the amount of school taxes you will pay every year to the amount you paid the first or second year you qualified (whichever is lower). This tax ceiling will apply to your home unless you make improvements.
Disabled Veterans
Veterans with at least a 10% disability rating qualify for this exemption. It can apply to any property and is transferable to a surviving spouse. Qualifications are as follows:
- You must be a Texas resident
- You must receive disability compensation from the US Department of Veterans Affairs for a service-connected disability
- You must have a disability rating of at least 10% or be classified as unemployable by the US Department of Veterans Affairs.
Exemptions range from $5,000 to $12,000 depending on the disability rating. Texas property tax exemptions grant veterans with a 100% disability rating or those who are unemployable due to service-connected disabilities a full exemption from property taxes.
Inherited Residence Exemptions
You can qualify for the inherited residence exemption if you are an heir property owner and inherited your primary residence by will, transfer on death deed, or intestacy, regardless of whether your ownership is recorded. Heir property owners can access 100% of the exemption and related tax protections even when there are co-owners of the property.
Surviving Spouse of First Responders Killed in the Line of Duty Exemptions
This exemption entitles a surviving spouse of first responders killed or fatally injured in the line of duty to a total property tax exemption on his or her residence if the surviving spouse has not remarried since the death of the first responder. This exemption applies regardless of the date of the first responder’s death.
Agricultural and Timber Exemptions
If your property is used for qualifying agricultural or timber businesses, you can file for an agricultural exemption. This exemption doesn’t deduct a dollar amount; instead, it’s a different method of calculating your property taxes.
Rather than using market value to determine the property’s tax basis, your local officials will calculate the property’s productivity value. This can significantly reduce your property tax obligations year after year.
Related: 2024 Preliminary Values for Texas
Getting an agricultural exemption involves specific requirements. Outside of city limits, the land must have been primarily used for agricultural or timber purposes for five of the past seven years. Within city limits, the land must have been used primarily for agricultural or timber purposes for all of the past five years. The exemption applies to limited portions of the land, as buildings and other structures are assessed at market value rates.
Solar and Wind-Powered Energy Device Exemptions
This exemption removes the amount of appraised value associated with the installation or construction of a solar or wind-powered energy device. The energy source must produce and distribute energy primarily for on-site use, regardless of whether the person owns the real estate on which the device is installed or constructed. Additionally, counties are required to use the cost method of appraisal to determine the market value of solar energy property that’s used for commercial purposes.
Temporary Disaster Exemptions
A qualified property that sustained at least 15% damage by a disaster in a governor-declared disaster area is eligible for a temporary exemption of a portion of the appraised value. A property owner must apply for the temporary exemption no later than 105 days after the governor declares a disaster area. The property must have sustained physical damage caused by the disaster and includes:
- Tangible personal property used for income production
- Improvements to real property
- Certain manufactured homes
Charitable Organizations And Business Exemptions
Texas property tax exemptions extend to charitable organizations and businesses. An organization must meet requirements regarding how it is structured, what it does, and how it uses its property. Real and personal property owned by organizations engaged primarily in performing charitable functions is exempt.
An organization is required to obtain a new Comptroller’s Office determination letter every fifth year after the exemption is granted. To implement the determination process, the Comptroller’s Office has adopted rules and offers a form for applying. Most of these exemptions have specific applications that can be found on the Texas Comptroller’s website.
How Property Tax Protests And Exemptions Work Together To Lower Your Taxes
Texas property tax exemptions and property tax protests are two crucial tax reduction strategies that work in different ways to safeguard your interests as a property owner.
While local tax assessors are required to apply exemptions to your property when determining your taxable value and calculating your property tax bill, these exemptions only come into play after your home’s market value (or appraisal value) has been established. Exemptions do not directly impact the initial step of determining your home’s fair market value.
Every spring, your local appraisal district will send you an updated appraisal value for your property. If you believe that the appraisal value is inaccurate, you have the right to protest it and fight for a lower valuation.
The lower you can make this number, the better. The appraisal value is what tax assessors use to start all the calculations for your property tax bill. It’s important to use both strategies every year: apply exemptions to lower the taxable value, and protest to ensure your appraisal value is fair, accurate, and as low as possible.
Start Fighting for Lower Property Taxes With Help From Tax Experts
A multi-step property tax relief strategy can save you hundreds or even thousands of dollars every year, but it can be overwhelming to manage. At Home Tax Shield, we can handle the entire tax protest process on your behalf, from filing the notice each year to presenting arguments during a formal hearing. Sign up today, and we’ll handle tax protests for you so you can benefit from fair property taxes every year.