Texas House and Senate Agree to New Property Tax Relief Legislation

This week, the Texas House and Senate came to an agreement on a new property tax relief bill,

On Wednesday, the Senate passed SB 2. According to the bill “Senate Bill 2, also known as the Texas Property Tax Reform and Transparency Act of 2019, was passed by the Texas Legislature in 2019. At its most fundamental level, S.B. 2 reforms the system of property taxation in three primary ways: (1) lowering the tax rate a taxing unit can adopt without voter approval and requiring a mandatory election to go above the lowered rate; (2) making numerous changes to the procedure by which a city adopts a tax rate; and (3) making several changes to the property tax appraisal process.

On Thursday, the House passed SB 2 along with SB 3 which relates to “providing property tax relief through the public school finance system, exemptions, limitations on appraisals and taxes, and property tax administration”.

The new legislation will

  • Give more than $7 billion to compress school district Maintenance & Operations rates (about 10.7 cents per $100)
  • Increase the standard homestead exemption to $100,000
  • Provide a three-year trial run for a 20 percent appraisal cap on commercial and non-homestead residential properties valued at or below $5 million
  • Give a $1.47 million increase to the state’s franchise tax exception
  • Allow for the creation of three elected positions on Appraisal Review Boards in counties above 75,000 population

Vance Ginn with Texas Public Policy Foundation did warn about the new legislation. Ginn wrote, “While it is good that there is so much going to tax relief, this package will make the tax system more complicated, make it more difficult to eliminate school M&O property taxes, contribute to higher school M&O property tax rates, and shift the burden around as homesteads and small businesses are chosen as the winners while renters and other employers are losers. The government should not be in the business of socially engineering people’s lives through the tax code by picking winners and losers, and this is exactly what this package does.”

Ginn did say, however, that this legislation is the second largest tax relief in state history.

Governor Greg Abbott is expected to sign the legislation.


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