Texas Property Tax Relief 2025 Key Changes and Beneficiaries

In June 2025, the government signed three key bills related to HB 9, SB 4, and SB 23, which pertain to Texas property taxes. This landmark event is a first for property owners in Texas, as this move marks the most significant property tax relief initiative in the state’s history. Texas Property Tax Relief could potentially create an estimated $10 billion statewide property tax relief package. However, it’s not final! The bill remains pending until November 2025, with a vote scheduled for approval.

Although this is a relief on the surface, as the government addresses a pressing concern expressed by voters, the local governments may offset the gains with rate adjustments. Rising home values could also erode benefits over time. The Texas Public Policy Foundation warns of a spending trap, as there’s a possibility that local governments will raise rates. The public sentiment appears to be contrary at the moment.

• A June 2023 UT/Texas Politics poll shows just 25% approval of legislative handling of property taxes; 12% felt there would be a meaningful impact.
• Republicans have expressed dissatisfaction, showing that the relief isn’t seen as sufficient.

The opinion makes the outcome of the November ballot a mystery! What is the possibility of Texas approving these changes?

Table of Contents

This article outlines the proposed property tax relief in Texas, set to take effect in January 2026, and discusses the realistic tax implications, the new bill’s benefits for senior citizens, and how Profitjets can help you file taxes and save big.

Before we delve into the changes, let’s take a bird’s-eye view of the tax environment in Texas.

Overview of the tax environment in Texas (2025)

Property tax is the backbone of funding essential services in Texas, with an uneven burden that impacts lower-income and fixed-income households the hardest. Texas doesn’t tax your income, but someone has to foot the bill. With no state income tax, Texas homeowners carry the lion’s share, funding schools, roads, police, and fire services. Nearly half of all state and local tax revenue comes straight from your property.

Homeowner burden is among the highest nationally, and the homeowners of Texas carry a unique responsibility. Here’s what we mean:

• The state of Texas has no state or local income tax. It is one of only seven states without a personal income tax. Homeowners and property owners are the primary revenue source for public services
• Property taxes generated $81.4 billion in Financial Year 2023, with property tax solely accounting for 46.1 % of all state-local tax revenue
• The effective property tax rate for owner-occupied homes averages about 1.47%, with the upper limit exceeding 2%, making it the seventh-highest in the U.S., even surpassing the property tax rates in the state of California.
• School districts depend heavily on property taxes. In FY 2025, local property taxes contributed an average of $3,809 per student, compared to $3,987 from state sources.
• The regressive system disproportionately affects low-income families.
  Without an income tax, Texas’s property and sales tax system hits lower-income Texans harder: the bottom 20% pay 14% of their income, while the top 20% only pay under 4%

Interesting Fact: Homeowners in major Texas metros, such as Austin, Dallas, Houston, and San Antonio, endure taxes that make up approximately 20% of their monthly housing costs.

What’s New in 2025 Texas Property Tax Relief?

In June 2025, the government signed three key bills: HB 9, SB 4, and SB 23. Thus, creating a $10 billion statewide property tax relief package. This comes into effect only if it passes positive ballot results this November.

1. Increase in Homestead Exemption

SB 4 (Prop 13) raises the school homestead exemption from $100,000 to $140,000, effective January 1, 2025, pending voter approval this November. This adjustment could potentially reduce school tax bills by approximately 50%.

2. Benefits for Senior and Disabled Homeowners

SB 23 SB 23 introduces an additional $60,000 exemption for homeowners aged 65 and older or those with disabilities, increasing their total school exemption to $200,000.

3. Business personal property exemption

HB 9 raises the exemption threshold from $2,500 to $125,000, offering significant relief to small and medium businesses with a projected average annual savings of about $2,500

4. Support for Significant State Spending

The legislature allocates $10 billion in this session, part of a $51 billion package over two years, with the remainder designated for rate compression and prior commitments.

5. Requirement for Voter Approval

All these changes depend on the passage of constitutional amendments (Prop 13, 11, 9, etc.) on the ballot for November 4, 2025.

*Side note: As there is a significant dependency on property taxes, some officials warn they may raise local tax rates to make up for the state-funded exemptions. This phenomenon is known as rate compression.

How do these changes impact the property owners/taxpayers of Texas?

According to the Texas Public Policy Foundation, this session’s tax relief doubles the impact of the 2023 package. Homeowners have already saved nearly $1,800 in total so far

Passage of this bill through voter confidence would mark the largest property tax relief initiative in Texas history, with $10 billion initially, part of a $51 billion total over two years

Here’s how the relief looks in numbers

This is subject to your property value, the location of your property, as each county, district, and province has a unique tax rate, and the know-how of using the exemptions effectively to minimize tax liability.

What is the senior exemption for property tax in Texas?

A senior can use both the homestead exemption & the senior boost to effectively lower the taxable value if the new bill passes and voter confidence is achieved on November 4, 2025. Here’s a realistic scenario of how senior citizens can benefit from the modifications:

If a 68-year-old individual, with a home value of $300,000, residing in Travis County

Assumption: approximate Texas average for the school district

The current School Property Tax Rate: $1.135 per $100 of value

Tax liability calculation before 2025 with the previous homestead exemption limit of $100,000

Brings down the Taxable Value to $200,000

At the applicable School Tax:

($200,000 ÷ 100) × $1.135 = $2,270/year

If the same individual claims the updated homestead exemption and the senior boost. The individual can effectively reduce the taxable property value to $100,000

Which means the School Tax is ($100,000 ÷ 100) × $1.135 = $1,135/year

This results in Annual Savings of about $1,135 per year.

The tax liability is effectively cut in half, and the numbers are substantial for seniors on fixed incomes.

Conclusion:

Monitor the local ballot guides detailing how the homestead or business exemptions might affect your specific tax bill. Remember, each county and district has a specific tax rate, so it’s essential to monitor legislative or local government actions regarding tax rate changes that may offset state benefits. The benefits of the new bills are subject to property value, the location of the property, and your know-how of using the exemptions effectively to minimize tax liability. Here’s where Profitjets can make a difference.

Profitjets is a trusted tax expert that can handle your tax filing, planning, and tax advisory needs with proficiency and accuracy. We will ensure there are no errors or delays in the processing of your property tax. We also provide outsourced accounting and bookkeeping services, as well as virtual CFO services. We are your one-stop solution for all accounting, bookkeeping, and tax needs. Contact us for a customized quote.

FAQs on Texas Property Tax