Property Taxes
Property taxes are essential for funding our public schools and the local government services that Texans depend on. Property tax collections from cities, counties, school districts, and other local taxing districts contributed $81 billion in 2023. Although our property taxes are higher than those in most states, they represent a fairer, less regressive, and more stable revenue source than other kinds of taxes.
Yet in recent years, the Legislature has aggressively cut property taxes in response to housing affordability concerns. This has put heavy fiscal pressure on our schools and local governments. State policymakers must continue to look for an appropriate balancebetween helping struggling Texans and funding our police and fire departments, EMS, roads, parks, trash collection, and more.
Facebook
Twitter
What's Happening in Texas
- There is no state property tax. Property taxes are levied only by local authorities. Texas has the seventh highest property taxes in the country, which impacts housing affordability for millions of Texans.
- All Texans pay property taxes. Homeowners pay property taxes directly, renters pay property taxes indirectly through their rent, and businesses pay taxes on their real estate and other forms of property. Approximately 3.7 million Texas households are housing-cost-burdened, paying more than 30% of their income in housing. This includes 51% of renter households, who are disproportionately Hispanic and Black.
- Many policies already exist to reduce property taxes for homeowners, some more equitable than others, including homestead exemptions, tax rate compression, and the tax freeze for senior homeowners. Of all these methods, the flat-dollar homestead exemption is the most equitable. Yet as lawmakers have expanded it in recent years (now $140,000), it has risen dramatically in cost while still excluding millions of Texans. Meanwhile, other methods of cutting property taxes are much more inequitable. Cuts based on percentage of property value, such as tax rate compression, can confer up to half of their benefits on Texas’s very top earners. Likewise, appraisal caps distort the real estate market, discourage sales, and subsidize wealthy and long-term homeowners. Instead of continuing to cut property taxes, lawmakers should examine other drivers of unaffordability, such as the cost of homeowners insurance.
- The 2026-27 budget includes $51 billion in property tax cuts made since 2019 alone. The Legislature relied heavily on our temporary surpluses in 2023 and 2025 to make big permanent tax cuts. The difference between total market property value and taxable value now stands at $1.5 trillion. Unlike tax cuts in previous years (such as the 2016 franchise tax reforms), the Legislature has made no effort to make up for those cuts with new, sustainable revenue.
- Property taxes are also limited by revenue caps on schools and local governments, instituted by the Legislature. Schools cannot increase their year-over-year revenue more than 2.5% and cities and counties are limited to 3.5%. If local policymakers attempt to raise tax revenue above that amount, a tax-rate election (TRE) must be held to allow voters to weigh in.
What We’re Doing
Every Texan advocates for a tax system that prioritizes investments in public and higher education, good jobs, and affordable healthcare. The Texas tax system does not ask Texans to pay their fair share to maintain those public structures: low- and middle-income families shoulder the burden of paying more of their paycheck, while corporations expand their profits from large tax breaks.
- We oppose the elimination of property taxes. Property taxes are the primary source of local funding. If they were eliminated, making up for the lost revenue would require a sales tax over 20%.
- We oppose additional property tax cuts and revenue caps that harm our schools and local governments, many of which are facing extremely tight budgets. Existing revenue caps on schools and local governments must not be lowered further.
- We especially oppose tax cuts that primarily benefit the wealthy. Any more cuts to property taxes must explicitly help lower-income homeowners and the 37% of Texans who rent.
- Property should be assessed at its full market value. Property appraisals must be equal, uniform, and linked to market value. But the appraisal process has a number of problems that should be addressed with policies such as sale-price disclosure.
- Flat homestead exemptions should be made available to local governments. A flat-dollar exemption meaningfully helps lower-income and middle-class homeowners. Cities, counties, school districts, and special-purpose districts should be able to offer a flat-dollar homestead exemption instead of the current, percentage-based exemption, which is less equitable.
By The Numbers
Related Resources
