Legislature Passes Measures to Increase Residential Homestead Exemption

October 28, 2021

Legislative News

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The Texas House of Representatives and the Texas Senate reached a late-night agreement on property tax reform measures the night before the third called legislative session was scheduled to end. Both chambers passed Senate Bill 1 and Senate Joint Resolution 2 by Sen. Paul Bettencourt (R-Houston), increasing the homestead exemption from $25,000 to $40,000. Before the increase can become official, voters will have to approve SJR 2 on the May 7, 2022, ballot. 

This effort came about with the third special session already underway, when Gov. Greg Abbott added property tax reform to the call on Sept. 22. Initially, both chambers planned to use American Rescue Plan Act (ARPA) funds to provide temporary property tax relief, but they could not agree on the best method.  The Senate planned to use a one-time compression of the tax rate to provide relief, and the House planned to send a one-time check to every individual with a homestead. Ultimately, an agreement was made to instead provide permanent relief through an increase in the homestead exemption. It is estimated that the increase for the homestead exemption will result in an annual savings of $175 per homeowner. The $3 billion in ARPA funds initially earmarked for property tax relief will be held in reserve. A study on how to use those funds will be conducted during the interim to develop recommendations to the 88th Legislature for additional property tax relief.

For more information about this article, please contact Katy Estrada.