On Monday, Texas Lieutenant Governor Dan Patrick and Texas House Speaker Dale Phelan released a joint statement announcing their agreement to propose legislation that will deliver “the biggest property tax cut in Texas history.” The proposed legislation comes in the form of HB 2/SB 2, HB 3/SB 3, and HJR 2, discussed further below.

Property Tax Reform – House Bill 2 (Rep. Morgan Meyer)/Senate Bill 2 (Sen. Paul Bettencourt)

HB 2 [1] and SB 2 [2] propose various changes to the Texas Education Code and Texas Tax Code, which would result in the following:

-The “maximum compressed rate” for school district property taxes would be reduced by $0.107;
-The homestead exemption for school district homes would be raised from $40,000 to $100,000; and
-The amount by which the appraisal value of non-homestead property (valued no more than $5,000,000) can be increased year-to-year would be limited to (i) a 20% increase, plus (ii) the market value of any new improvements to the property during the year.

School districts would be eligible for additional funding to account for the reduction in property taxes that would result from the above changes. The Texas Legislature also seeks to amend Section 1, Article VIII of the Texas Constitution to implement these changes. [3] The proposed amendment is discussed in House Joint Resolution 2.

The above changes would result in an estimated $12.7 billion tax cut through August 31, 2025, and an estimated $33.9 billion tax cut through 2028. [4] Each of the above bills was filed on July 10, 2023, and is expected to be passed by the Texas Senate later this week. The bills would then go to Governor Greg Abbott, who is expected to sign them into law.

Franchise Tax Reform – House Bill 3 (Rep. Charlie Geren)/Senate Bill 3 (Sen. Paul Bettencourt)
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