Texas Property Tax Law Changes: 2023-2026 Complete Guide
Texas has enacted historic property tax relief over the past three years. From the landmark $18 billion Proposition 4 package in 2023 to the 89th Legislature's continued reforms in 2025, homeowners have seen significant changes to exemptions, tax rates, and the protest process.
This guide covers every major change and what Texas homeowners should expect in 2026.
Quick Summary: What Changed?
| Year | Key Change | Homeowner Impact |
|---|---|---|
| 2023 | Proposition 4 passed | $100,000 homestead exemption, 10.7% school tax rate cut |
| 2024 | Prop 4 implementation | Average homeowner saved $1,200+ |
| 2025 | 89th Legislature reforms | Homestead increased to $140,000, senior exemption to $60,000 |
| 2026 | Full implementation | Combined savings of $1,762+ for average homeowner |
2023: Proposition 4 - The Largest Property Tax Cut in Texas History
In November 2023, Texas voters approved Proposition 4 with overwhelming support (83% in favor). This $18 billion property tax relief package was the largest in state history.
Homestead Exemption Increase
The cornerstone of Proposition 4 was increasing the school district homestead exemption from $40,000 to $100,000.
What this means: If your home is valued at $400,000, you now pay school taxes on $300,000 instead of $360,000. At a 1% school tax rate, that's $600 in annual savings from the exemption increase alone.
School District Tax Rate Compression
Proposition 4 required the Texas Commissioner of Education to reduce each school district's maximum compressed tax rate (MCR) by $0.107 per $100 of value - approximately an 18% reduction.
This compression, combined with the exemption increase, delivered what supporters called the "Texas Two-Step" of property tax relief.
20% Appraisal Cap for Non-Homestead Properties
For the first time, Texas limited appraisal increases on properties that don't receive a homestead exemption:
- Applies to commercial, rental, and residential non-homestead properties
- Properties must be valued under $5 million
- Appraisals cannot increase more than 20% per year
- Temporary provision: Set to expire in 2026 unless extended
Senior and Disabled Homeowner Relief
Proposition 4 also provided relief to homeowners 65 and older or with disabilities:
- Reduced the limitation on school taxes (the "senior freeze")
- Ensured seniors benefited from the same rate compression as other homeowners
- Estimated additional savings of $200+ for eligible homeowners
Real-World Results
The average Texas homeowner saw their property tax bill decrease by 28% in 2024 compared to 2023. The Texas Comptroller estimated savings of:
- $1,200+ per year for average homeowners
- $1,400+ per year for seniors and disabled homeowners
- $2,500+ over two years for most homeowners
2025: The 89th Texas Legislature Continues Reform
Property tax relief remained a top priority for the 89th Texas Legislature. Governor Abbott declared it an emergency item, and lawmakers delivered additional relief through several key bills.
Senate Bill 4: Homestead Exemption Increased to $140,000
SB 4 increases the mandatory school district homestead exemption from $100,000 to $140,000 - a $40,000 increase.
| Exemption Amount | Before SB 4 | After SB 4 |
|---|---|---|
| General homestead | $100,000 | $140,000 |
| Estimated annual savings | - | $363 (average) |
Important: This increase requires voter approval. It will appear on the November 2025 ballot as a constitutional amendment. If approved, it takes effect for the 2025 tax year.
Senate Bill 23: Senior Exemption Increased to $60,000
SB 23 dramatically increases the additional exemption for homeowners 65 and older (or disabled) from $10,000 to $60,000.
| Exemption Type | Before SB 23 | After SB 23 |
|---|---|---|
| Additional senior/disabled exemption | $10,000 | $60,000 |
| Combined exemption (seniors) | $110,000 | $200,000 |
For a senior homeowner with a $400,000 home, this means paying school taxes on just $200,000 of value.
House Bill 8: Additional School Tax Rate Compression
HB 8 provides a temporary, one-year reduction in school district tax rates for 2025-2026:
- Reduces each district's MCR by an additional $0.0331 per $100 of value
- This is on top of the compression from Proposition 4
- Temporary measure: Expires September 1, 2027 unless extended
House Bill 9: Business Personal Property Exemption
HB 9 exempts up to $125,000 of business personal property (BPP) from taxation by all taxing entities.
- Applies to equipment, inventory, and other business property
- Benefits small businesses across Texas
- Takes effect January 1, 2026 (if voters approve the enabling constitutional amendment)
House Bill 1533: ARB Process Reforms
HB 1533 introduces significant reforms to the Appraisal Review Board (ARB) process, making it easier for homeowners to protest their property taxes:
- Enhanced transparency requirements for appraisal districts
- Stricter fairness enforcement in ARB hearings
- Streamlined communication between property owners and appraisal districts
- Effective: September 1, 2025
Senate Bill 850: Tax Refund Protections
SB 850 strengthens protections for taxpayers who overpay:
- Establishes firm deadlines for processing tax refunds
- Creates automatic refund triggers
- Imposes interest penalties on taxing entities that delay refunds
- Effective: September 1, 2025
Total Funding for Property Tax Relief
The General Appropriations Act (SB 1) allocated $51 billion for school property tax relief, ensuring the state can fund these reductions without cutting education funding.
November 2025 Ballot: What Voters Will Decide
Several property tax measures require voter approval through constitutional amendments:
Proposition 4 (2025) - Homestead Exemption Increase
Voters will decide whether to approve the $140,000 homestead exemption increase from SB 4.
Other Property Tax Amendments
Additional amendments related to business personal property exemptions and other tax provisions will also appear on the ballot.
If you support lower property taxes, vote YES on property tax relief amendments in November 2025.
2026: What Homeowners Should Expect
Combined Savings
When combining the 2023 and 2025 reforms, the average Texas homeowner can expect:
| Savings Source | Estimated Annual Savings |
|---|---|
| 2023 Prop 4 reforms | $1,399 |
| 2025 SB 4 homestead increase | $363 |
| Total | $1,762+ |
Senior homeowners will see even greater savings due to the increased $60,000 exemption.
Implementation Timeline
| Date | Event |
|---|---|
| September 1, 2025 | HB 1533 (ARB reforms) and SB 850 (refund protections) take effect |
| November 2025 | Voters decide on homestead exemption increase |
| January 1, 2026 | HB 9 (business property exemption) takes effect (if approved) |
| 2026 tax year | Full implementation of all approved measures |
What Might Expire
The 20% appraisal cap for non-homestead properties is set to expire in 2026. Watch for legislative action to extend this provision.
How These Changes Affect Your Property Tax Protest
Even with these significant reforms, protesting your property taxes remains valuable:
- Exemptions reduce taxable value, not appraised value - If your appraisal is too high, you're still overpaying
- HB 1533 makes protesting easier - New ARB reforms provide more transparency and fairness
- Savings compound - A lower appraised value means your exemptions apply to a smaller base
For example, if you successfully protest and reduce your appraised value by $50,000:
- Your exemptions apply to the new, lower value
- You save on ALL taxing entities (school, city, county, special districts)
- The savings continue year after year
Frequently Asked Questions
How much will I save from these changes?
The average Texas homeowner saves approximately $1,762 per year from combined 2023 and 2025 reforms. Seniors save more due to the increased exemption.
Do I need to do anything to receive these savings?
The tax rate reductions apply automatically. However, you must apply for your homestead exemption if you haven't already.
When does the new $140,000 exemption take effect?
If voters approve it in November 2025, it takes effect for the 2025 tax year.
Will the 20% non-homestead cap be extended?
This remains uncertain. The cap is currently set to expire in 2026. Watch for action in the 90th Legislature (2027) or a special session.
Should I still protest my property taxes?
Yes. These reforms reduce tax rates and increase exemptions, but if your property's appraised value is too high, you're still overpaying. Learn how to protest.
Stay Informed
Property tax law continues to evolve in Texas. Ballard Property Tax Protest monitors legislative changes and helps homeowners navigate the system.
Want help reducing your property taxes? Our team handles the entire protest process for you - and you only pay if we save you money.
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