Every Texan is an independent research organization that, for 40 years, has advocated for public policy for better access to quality health care, food security, education, good jobs, and more equitable tax policy for all Texans. Every Texan supports HB 1367, which would allow Texas counties to provide a flat-dollar homestead exemption for resident homeowners up to $100,000.
Every Texan is well aware of the rising costs of housing. It is vital we strike the right balance between helping low-income Texans struggling with rising property taxes and other housing costs, while preserving revenue for our schools and public services.
For years, we have urged the Legislature to grant local governments the authority to offer a flat-dollar homestead exemption, much like the existing exemption for school district maintenance and operations tax. It is the most equitable way to cut residential property taxes. While we are usually wary of big tax breaks, such exemptions benefit all Texas homeowners across the board, regardless of their income. Percentage-based exemptions, on the other hand, tilt the benefit to wealthier homeowners.
HB 1367 would maintain local control by letting counties decide to offer flat-dollar homestead exemptions if they wish. Local elected officials – in this case, county commissioners courts – can look at their budgets and work with their constituents. Together, they can decide on an appropriate homestead exemption that stabilizes residents’ property taxes while still ensuring sufficient revenue to provide county services.
Over time, a flat-dollar homestead exemption also brings more stability to local governments’ revenue streams. Percentage exemptions are tied to property value growth. So when property values rise unpredictably, localities may experience shortfalls. Revenue loss to a flat-dollar homestead exemption is easier to predict and therefore more manageable.
Previous similar bills that did not pass, such as SB 279 in the 84th Legislature, would have granted this option to cities and special purpose districts as well. Furthermore, that bill also allowed homeowners to retain the percentage-based exemption if they preferred. These are also options to consider in this bill.
Finally, though we do believe this method is the most equitable way to cut taxes for resident homeowners, we note that homestead exemptions provide no help for renters, who make up 37% of Texas households. We continue to suggest other methods to help those Texans with housing costs, including circuit breakers or renter’s credits.