The Texas property tax relief debate that has raged recently between House Speaker Dade Phelan and Lt. Gov. Dan Patrick has been a topic of discussion for quite some time now, particularly after legislators failed to pass substantive cuts in the regular session or the first special session. Both have proposed plans to relieve businesses and homeowners burdened with high property taxes, and some key distinctions exist between them.
Both plans aim to provide relief to homeowners but differ in their approach, particularly in the amount of targeted relief to homesteaders.
The discussion on which plan to adopt is ongoing, and experts are dissecting the potential impact of each proposal. It remains to be seen which plan — or a combination of the two — will finally be selected to provide property tax relief to Texans and when that will happen.
Tony Trahan, a property tax consultant at Rockwall-based KE Andrews, a company specializing in minimizing property taxes for real and personal property across the United States, reviewed both Texas tax relief proposals the Senate and the House put forth:
The latest proposal from the Senate offers the same breakdown in terms of a cut: 70% rate compression for businesses and homeowners while setting aside 30% for Texas homesteaders in targeted relief. The plan was improved by adding a few sweeteners, such as removing the franchise tax for more small businesses. Is there anything else taxpayers need to know compared to the House plan, which has focused since the first special session on merely rate compression across the board?
The Senate plan has largely remained the same. The proposed homestead exemption is the largest sticking point and differentiator between the two, with the Senate proposing an increase on the exemption from $40,000 to $100,000.
I believe they’re trying to target something like 60,000 businesses or so that would no longer pay the franchise tax as they would be under the roughly $2.5 million. Last week, one of the new additions to the plan is that a school district’s tax revenue cannot grow more than 2.5% (not including new construction) without voter approval. The Senate is proposing to lower that even further to 1.75%.