Texas has recently implemented significant changes to its property tax laws, aiming to provide relief to homeowners and businesses burdened by increasing property taxes. These changes, which became effective on January 1, 2020, have generated interest and discussion among residents and property owners across the state.
Background on Property Taxes in Texas
In Texas, property taxes play a crucial role in funding local governments, school districts, and other public services. Unlike some other states, Texas does not impose a state income tax, making property taxes a significant source of revenue.
Property taxes in Texas are assessed and collected at the county level. Each county’s appraisal district determines the value of properties within its jurisdiction, and local taxing entities set the tax rates based on their budgetary needs. The combination of the appraisal value and the tax rate determines the amount of property tax owed by each property owner.
The Need for Reform
Over the past decade, in Texas property taxes have been steadily increasing, leading to higher property tax bills for homeowners and businesses. This rising trend has created a strain for many property owners, particularly those on fixed incomes or struggling with the cost of living.
Recognizing the need for reform, the Texas legislature passed House Bill 3 and Senate Bill 2 in 2019, collectively known as the “Texas Property Tax Reform and Transparency Act.” These bills aim to provide relief and improve transparency in the property tax system.
Key Changes under the New Law
Lowering the Revenue Cap: One of the significant changes introduced by the new law is a decrease in the revenue growth rate for cities, counties, and certain special districts. Under the previous law, they could increase their property tax revenue by up to 8% without voter approval. The new law reduces this cap to 3.5%, excluding certain exemptions.
Voter Approval for Exceeding Revenue Cap: If a local government entity wants to increase its property tax revenue beyond the 3.5% cap, it must obtain voter approval through a referendum. This provision aims to give taxpayers a voice in determining the growth of their property taxes.
Increased Transparency: The new law requires local governments to provide more detailed information to property owners regarding tax rates, proposed increases, and the impact on individual property tax bills. It also mandates public hearings to discuss proposed tax rates before their adoption.
School Funding: House Bill 3 restructures the state’s school finance system and provides additional funding for education. The aim is to reduce the reliance on property tax revenue for funding schools, which in turn, could lead to lower property tax burdens for homeowners.
Property Tax Appeals: The law also introduces reforms to the property tax appeal process, making it more accessible and transparent for property owners.
Impact on Property Owners
The effects of the new property tax law will vary depending on the circumstances and location of the property. While many homeowners and businesses may experience some relief from the lower revenue cap, the law does not guarantee a decrease in property tax bills for everyone.
Property owners should stay informed about changes in their local tax rates and actively engage in the public hearings and referendums that may affect their tax bills.
The latest Texas property tax law represents a significant step towards addressing the concerns of homeowners and businesses burdened by rising property taxes. By implementing lower revenue caps, introducing voter approval requirements, and increasing transparency, the law aims to provide relief and improve the overall property tax systemHowever, it is important for property owners to stay engaged, understand the changes, and actively participate in the process. By doing so, they can ensure that their voices are heard and that the property tax system continues to evolve in a fair and equitable manner.
Natasha Carroll
Real Estate Broker
www.natashacarrollrealty.com
natashacarroll@natashacarrollrealty.com
832-346-7631
