A tidal wave of numbers—and even some Donald Trump impressions—filled the Local Government Committee hearing on Tuesday as lawmakers debated the Texas Senate’s latest property tax relief plan.
At the heart of the discussion was Senate Bill 4 (SB 4), filed by Sen. Paul Bettencourt (R-Houston), which seeks to increase the homestead exemption from $100,000 to $140,000 on school district tax bills. The proposal, part of the Senate’s broader effort to reduce property tax burdens, was unanimously coauthored by both Republicans and Democrats.
What the Bill Does and Why It Matters
Under SB 4, the state would absorb an estimated $1.04 billion in tax relief for homeowners in the 2026-2027 budget cycle. That cost is expected to shrink to $272 million in the following biennium as rising property values naturally catch up to the new exemption amount.
Bettencourt emphasized that boosting homestead exemptions is the most cost-effective way to provide relief, arguing that it delivers bigger tax cuts for homeowners at a lower cost to the state compared to other strategies, such as rate compression.
“This is real money for folks to keep them in their homes,” Bettencourt said.
A Growing Problem for Homeowners
Texas property owners have felt the pinch of rising appraisals, prompting the Legislature to revisit tax relief measures nearly every session. Just two decades ago, the homestead exemption was only $5,000; last session, it jumped to $100,000. Now, lawmakers are pushing for another increase, citing concerns from constituents who say they can no longer afford their homes.
“The thing I heard the most while knocking on doors is ‘I’m going to have to sell my home. I cannot afford my property taxes anymore,’” said Sen. Mayes Middleton (R-Galveston).
The Battle Over Property Tax Relief
Last session, lawmakers fought over whether to pair homestead exemptions with compression (state-funded reductions in school district tax rates) or pursue broader appraisal caps. The disagreement led to two special sessions before a compromise was reached: a mix of exemption increases and appraisal caps, including a 10% limit on homestead taxable value increases and a trial 20% cap on non-homestead properties worth up to $5 million.
The Senate remains firmly committed to prioritizing homestead exemption increases, favoring homeowners over commercial property owners. Critics argue this approach disproportionately benefits certain taxpayers, but supporters say it ensures relief goes to those who need it most—homeowners struggling with rising tax bills.
Bettencourt sought to quash any discussion of eliminating property taxes entirely, pointing out that replacing all local property taxes would require a 22% sales tax rate—a drastic increase from the current 6.25%.
Public Testimony and Legal Challenges
During public testimony, Jarrett Woodward, who sued the state over past tax-related constitutional amendments, accused lawmakers of repeating past mistakes. He argued that the 2023 version of the tax relief strategy is no longer legally in effect, though his claims were not acknowledged by committee members.
Meanwhile, Gov. Greg Abbott has made property tax relief a top priority for the 89th Legislative Session, calling for at least $10 billion in cuts to school district tax bills. One of his more controversial proposals would require a two-thirds vote to approve tax increases, making it significantly harder for local governments to raise property taxes.
What’s Next?
SB 4 and its accompanying constitutional amendment, Senate Joint Resolution 2, have been sent to the full Senate for consideration. The Texas House has yet to unveil its own tax relief plan, though its draft budget allocates $6.5 billion for unspecified property tax reductions.
