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  • Milad Taghehchian, CPA, CFP(R)

Understanding the Impact of 2023 Texas Property Tax Legislation Changes

In 2023, Texas homeowners found themselves facing significant changes in property tax legislation that have stirred both excitement and apprehension. These new laws have the potential to reshape the way property taxes are assessed and paid, impacting homeowners across the state. We will delve into the key aspects of the 2023 Texas property tax legislation changes and examine their potential impact on homeowners.

Key Components

Tax Rate Caps:

  • Prior to the legislation, a city had the authority to raise property taxes by up to 8% each year without requiring voter approval.

  • Under the new law, the annual cap for property tax rate increases is lowered to 3.5% for most cities and counties, and 2.5% for school districts.

  • For example, if your property tax bill was $5,000 last year, and your local city previously increased rates by 8%, your tax bill could have gone up to $5,400. Under the new law, that increase would be limited to $5,175, potentially saving you $225.

Appraisal Reforms:

The legislation introduces measures to enhance the transparency and accountability of property appraisals. Homeowners can now better understand how their property values are assessed, and this can have a direct impact on their tax liability.

Homestead Exemptions:

  • Before the legislation, a homestead exemption might have been set at $25,000 for property tax calculation purposes.

  • With the new law, this exemption could increase to $40,000 or more, depending on your property's value and your local jurisdiction.

  • If your home is valued at $200,000 and you previously received a $25,000 homestead exemption, your taxable value was $175,000. With the new exemption, your taxable value could drop to $160,000, leading to a potential savings of $375.

Transparency and Accountability:

  • Before the legislation, property appraisals may have seemed opaque, making it challenging for homeowners to assess their accuracy.

  • Under the new law, appraisal districts are required to provide clearer information about how they calculate property values, making it easier for homeowners to identify errors or discrepancies.

So what should a property owner do?

Understand Your Property Appraisal:

Take the time to understand how your property's value is assessed. Review your appraisal notice carefully and, if necessary, consider appealing if you believe it's inaccurate.

Plan Your Budget:

With potential tax relief on the horizon, consider how you can use the extra funds wisely. Whether it's investing in home improvements, saving for retirement, or paying down your mortgage, a well-thought-out budget can help you make the most of the changes.

Stay Informed:

Keep yourself updated on any developments related to the legislation and its implementation. This will enable you to adapt your financial strategies accordingly.

As always, talk to your CPAs and Financial Planners to plan how best to take action for your particular situation.


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