Big news for North Texas homeowners: property tax relief is on the way. The Texas House and Senate have reached a deal on a sweeping property tax relief package that promises to put real money back in homeowners’ pockets. If you own a home in the Dallas-Fort Worth area (especially in the fast-growing northern suburbs), you could soon see a noticeable drop in your property tax bills. Below, we’ll break down what’s in the deal, how it benefits you, and what potential downsides to watch for – all in plain English.
What’s in the Property Tax Relief Deal?
Lawmakers packed several big changes into the latest tax relief plan. Here are the key components of the deal and how each one works:
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- Bigger Homestead Exemption: The plan raises the homestead exemption on school district taxes from $100,000 to $140,000 of a home’s value. Homeowners age 65+ or with disabilities get an extra $60,000 exemption on top of that, up from the previous $10,000. This means qualifying seniors would have a $200,000 total homestead exemption on school taxes under the new law. Estimates show the average Texas homeowner will save approximately $363.44 due to this increase. (Texas Land Commissioner)
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- School Tax Rate “Compression”: Texas will buy down local school tax rates by using state funds to offset what schools would normally collect from property owners. This effectively forces school districts to lower their tax rates and is funded by the state’s budget surplus. Lawmakers plan to put another $3 billion toward compression, with the total tax-cut tab expected to grow in the future. (The Texas Tribune)
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- Appraisal Growth Cap: Texas law already limits how much your homestead’s taxable value can increase to 10% per year. In the 2023 deal, lawmakers also added a temporary 3-year pilot cap of 20% per year on appraisal increases for other real properties valued under $5 million. This cap helps slow down how fast your tax bill can grow even when market values are surging. (The Texas Tribune)
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- Business Property Tax Relief: Homeowners aren’t the only ones getting a break. The deal also expands a key exemption for businesses. Texas taxes business personal property (equipment, inventory, etc.), but the exemption on that is leaping from a mere $2,500 to $125,000 starting next year. This means most small businesses won’t pay taxes on their business equipment or inventory at all.
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- State Funding for Schools: If school districts are taxing us less, how do they pay for education? The state will replace those lost local tax dollars with other revenue (like surplus funds, sales tax, etc.) to ensure schools stay funded. In total, ongoing property tax relief since 2019, including these new provisions, will cost the state over $51 billion in the next biennium. (Raise Your Hand Texas)
How Much Will DFW Homeowners Save?
If you’re a homeowner in the Dallas-Fort Worth area, you’re probably wondering, “What kind of difference will this really make for me?” The answer: it could be hundreds – even over a thousand – dollars each year, depending on your home value and situation. Here are some examples and figures:
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- Savings from the higher homestead exemption: By raising the school tax exemption from $100k to $140k, the state is letting you subtract an extra $40,000 from your home’s taxable value for school taxes. For instance, if your home is valued at $350,000, under the old rules you paid school taxes on $250,000 of that value (after the $100k exemption). Now you’ll be taxed on only $210,000. If your school district’s tax rate is say $1.20 per $100 of value, that $40k difference translates to about $480 less in school taxes annually.
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- Big picture (combining with last year’s cuts): This property tax deal builds on a major tax cut passed in 2023. Last year, state leaders compressed school tax rates and raised the homestead exemption (from $40k to $100k), which they touted as the “largest property tax cut in Texas history” at $18 billion. Thanks to that one-two punch of rate cuts plus the $100k exemption, the average Texas homestead saw annual school tax savings in the ballpark of $1,250 to $1,450.
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- Senior homeowners: If you’re over 65 or disabled, the news gets even better. As noted, your total homestead exemption for school taxes would jump to $200k under this plan. State officials have said this change would be so substantial that most senior or disabled homeowners would effectively owe no school property taxes at all. Currently, about 45% of this demographic pays no school taxes because of existing exemptions and tax “freezes” – this reform could push that up to over 60%. (Houston Chronicle)
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- DFW metro specifics: Homeowners in the DFW area stand to benefit a lot because property values here have risen so quickly. For example, Collin County (Plano/Frisco/McKinney/Allen area) and Denton County saw sharp appraisal increases in recent years, leading to higher tax bills. The combination of a $140k exemption and compressed rates will provide meaningful relief. If your home in, say, Allen or Frisco is worth $500,000, you’ll now only pay school taxes on $360,000 of that value (instead of $400,000 before) – that’s $40k more shielded, saving you perhaps ~$500-$600 a year on top of last year’s rate reductions.
(Keep in mind: these savings discussions mainly refer to school district taxes, which typically make up the largest portion of your property tax bill. You’ll still pay county, city, and other taxes, but lowering the school tax is a big deal – for many DFW homeowners, school taxes are roughly half (or more) of the total property tax burden.)
Will Governor Abbott Sign It, and What’s Next?
The short answer: Yes, we fully expect this to become law. Governor Greg Abbott has been a vocal champion of property tax cuts – he declared property tax relief an “emergency item” at the start of this legislative session. He personally helped hammer out the details of this deal with Lt. Gov. Dan Patrick and House Speaker Dade Phelan. Abbott praised the 2023 tax cut package as a “massive victory for all 5.7 million Texas homeowners” and there’s every indication he’s on board with this new round of cuts as well.
However, one more step is needed for the homestead exemption increase: Texas voters will have to approve it via a constitutional amendment. The last increase to $100k was approved by voters in November 2023, and you can expect a similar proposition on the ballot in November 2025 to ratify the jump to $140k. These measures usually pass easily – after all, who’s going to vote against a tax cut? – but it’s something to be aware of. Assuming voters give a thumbs up, the larger exemption would kick in soon after. Bottom line: The relief is essentially a done deal, and you should see it reflected on upcoming property tax bills (likely the bill you get in late 2025 for that tax year).
Are There Any Downsides or Catches?
Any big policy change comes with a few caveats. While this tax relief package is largely great news for homeowners, it’s important to understand some potential concerns that have been raised:
Long-Term School Funding Questions: The property tax cuts are being fueled by Texas’s huge budget surplus right now. But what about when the surplus is gone? Some lawmakers worry that the state may not always be flush with cash to keep filling in the hole in school budgets. If in a few years the
Renters Don’t Benefit Directly: About one-third of Texans are renters, not homeowners, and they won’t see a direct break from this deal. Renters pay property taxes indirectly through their rent, but Texas isn’t sending them any relief checks or exemptions. Some officials argue that landlords will pass on some of their tax savings to tenants, but there’s no guarantee of this. If you’re renting in DFW, you might not notice any change at all.
Possible Shift of Tax Burden: Cutting business personal property taxes is a win for businesses, but local government officials warn it could have side effects. If businesses are taxed on less value, homes make up a larger share of the tax base by proportion. This could lead to cities and counties adjusting their tax rates upward to compensate for lost revenue, potentially shifting the tax burden onto homeowners.
