Two years after a legislative standoff over property taxes, the Texas House and Senate are once again advancing competing proposals for how to allocate at least $10 billion in relief, as called for by Gov. Greg Abbott. With both chambers committed to cutting taxes, the debate centers on who should benefit most—homeowners or businesses.
The House Plan: A Business-Focused Approach
Chairman Morgan Meyer (R-Dallas) has introduced House Bills (HB) 8 and 9, along with House Joint Resolution (HJR) 1, which proposes a constitutional amendment to implement the changes. The House plan prioritizes business tax relief in two key ways:
Expanding the Business Personal Property Tax Exemption – Businesses currently pay taxes on the value of equipment, inventory, and machinery they use in operations, with only $2,500 exempt. The House plan would dramatically increase that exemption to $250,000, potentially eliminating this tax burden for thousands of small and medium-sized businesses.
Compressing School District Property Tax Rates – The plan includes a reduction of $0.0331 per $100 of property value in school district Maintenance & Operations (M&O) tax rates. This compression would apply to all property owners, both residential and commercial.
The House’s draft budget also designates $3.5 billion from the Property Tax Relief Fund, which was created last session, to support further tax cuts. However, no official fiscal note has been released for the full package, leaving questions about the exact financial impact.
The Senate Plan: Prioritizing Homeowners
The Senate, meanwhile, has proposed a plan that leans heavily toward homeowner relief. Their key provisions include:
A $40,000 Increase to the Homestead Exemption – This would raise the current exemption from $100,000 to $140,000, reducing the taxable value of primary residences and lowering homeowners’ tax bills significantly.
$3 Billion in M&O Tax Rate Compression – Like the House, the Senate supports compressing school district tax rates, though at a slightly higher amount.
Last session, the Senate successfully pushed a homestead exemption increase from $40,000 to $100,000, securing a victory over the House’s preference for business tax relief and appraisal caps. Now, the upper chamber is doubling down on its strategy, arguing that homestead exemptions provide more targeted relief to Texas homeowners.
A Recurring Standoff Over Tax Policy
At the heart of the disagreement is a fundamental difference in philosophy. The House argues that prioritizing homestead exemptions leaves businesses—particularly small businesses—at a disadvantage. They contend that applying relief broadly through school tax rate compression and business exemptions helps create a more business-friendly environment in Texas.
The Senate, however, insists that homestead exemptions provide more meaningful tax relief to average Texans. Their argument is simple: $1 billion in homestead exemptions benefits homeowners directly, while $1 billion in tax rate compression applies to all properties, including rental properties and businesses. The Senate believes its approach does more to help everyday Texans struggling with property taxes.
A Repeat of 2023?
This is not the first time the two chambers have reached an impasse on property tax relief. In 2023, the House and Senate spent months in a deadlock, with then-Speaker Dade Phelan (R-Beaumont) and Lt. Gov. Dan Patrick exchanging jabs on social media rather than negotiating directly. Ultimately, the Senate prevailed, securing the $60,000 homestead exemption increase.
Now, the battle lines are drawn once again. Speaker Dustin Burrows (R-Lubbock), speaking at last week’s Texas Public Policy Foundation 2025 Policy Summit, reaffirmed the House’s commitment to meeting Abbott’s $10 billion relief target. However, with the House and Senate once again pushing competing priorities, another stalemate could be looming.
