Texas property tax reform over the 2023 and 2025 legislative sessions raised the school district homestead exemption to $100,000, compressed school tax rates statewide, capped annual appraisal increases on many non-homestead properties at 20%, and, starting in 2026, exempts up to $125,000 of business personal property. Most homeowners with an existing exemption get the bigger deduction automatically. Several of the other benefits, though, require a timely application or expire on a set date, so knowing what to file and when decides how much you actually save.
The $100,000 Homestead Exemption
Senate Bill 2 from the 88th Legislature’s second special session in 2023 more than doubled the residence homestead exemption for school district taxes, moving it from $40,000 to $100,000. The deduction comes off your primary residence’s appraised value before the school district applies its rate. A home appraised at $350,000 is taxed by the school district as though it were worth $250,000.1Texas Legislature Online. Texas Senate Bill 2 – Property Tax Relief Act
School district taxes are usually the biggest line on a Texas property tax bill, so this one change delivers the largest visible savings for most homeowners. The $100,000 floor is now permanent in the Tax Code and applies automatically if you already have a homestead exemption on file. Existing filers do not need to reapply.2Texas Legislature Online. Texas Senate Bill 2 – 88th Legislature 2nd Called Session
If you bought partway through the year, you can claim a prorated general homestead exemption for the portion of the year you own and occupy the home. The property cannot already carry a homestead exemption for that year, you cannot be claiming one on another property, and you must apply before the first anniversary of your purchase date.3State of Texas. Texas Tax Code TAX 11.43 – Application for Exemption One limit to know: the 10% annual appraisal cap that protects homesteads from big valuation jumps does not begin until you have owned and occupied the home as your principal residence for a full calendar year starting January 1. During that first partial year, appraised value is not capped.
Extra Exemptions for Seniors, Disabled Homeowners, and Veterans
The general exemption is a starting point. Texas layers additional protections on top for specific groups, and the combined effect can be substantial.
Over-65 or Disabled
Homeowners who are 65 or older, or disabled, qualify for an additional $60,000 school district exemption on top of the standard $100,000, bringing the school district total to $160,000.4State of Texas. Texas Tax Code Section 11.13 – Residence Homestead Cities, counties, and other taxing units may offer their own additional exemptions for these groups, typically at least $3,000 of appraised value and often more.
Qualifying homeowners also get a school district tax ceiling. Once you turn 65 or receive a disability determination, your school district taxes are frozen at the amount you owed in the first year you qualified. If the district’s rate drops the next year and produces a lower bill, the ceiling ratchets down to that lower amount and stays there.5Texas Attorney General. Opinion No. KP-0470 The freeze holds as long as the property remains your homestead, even if appraised value climbs.
The ceiling travels. If you sell and buy another Texas home, the school district cannot tax the new homestead at more than a proportional amount based on the freeze from the old one. You will need a written certificate from the appraisal district where the former home was located.6State of Texas. Texas Tax Code Section 11.26 – Limitation of School Tax on Homesteads of Elderly or Disabled
Homeowners over 65 or disabled can also defer payment of delinquent taxes on their homestead. During deferral, the property accrues interest at 6% per year, with no penalty. The full balance and accrued interest come due when the deferral ends.
100% Disabled Veterans
Veterans rated 100% disabled by the U.S. Department of Veterans Affairs, or rated individually unemployable, receive a complete exemption from property taxes on the residence homestead. The entire appraised value is exempt from every taxing unit, not just the school district.7State of Texas. Texas Tax Code Section 11.131 – Residence Homestead of 100 Percent or Totally Disabled Veteran
A surviving spouse who was married to a qualifying veteran at the time of death keeps the full exemption on the same property if the spouse has not remarried. If the surviving spouse moves, the exemption transfers as a fixed dollar amount equal to the exemption received in the last year at the former homestead.7State of Texas. Texas Tax Code Section 11.131 – Residence Homestead of 100 Percent or Totally Disabled Veteran Disabled veterans can file a late application up to five years after the tax delinquency date, well beyond the standard two-year window.8Texas Comptroller of Public Accounts. 100 Percent Disabled Veteran and Surviving Spouse Frequently Asked Questions
School Tax Rate Compression
Higher exemptions protect homeowners. Rate compression is how the state cut bills for everyone, including commercial and industrial owners who do not qualify for homestead benefits. State funds replace local property tax revenue the school districts would otherwise collect, buying down the maintenance and operations rate that pays for running schools.
For the 2025 tax year, the Texas Education Agency set the maximum compressed M&O rate at $0.6322 per $100 of taxable value. Districts with additional local compression can go as low as $0.5689 per $100.9Texas Education Agency. Tax Year 2025 Maximum Compressed Tax Rates Many districts had M&O rates well above that level before the reforms. If a school district wants to adopt a rate above the voter-approval rate, it must hold an automatic ratification election, and a simple majority can reject it.10Texas Comptroller of Public Accounts. Elections to Approve Tax Rate
The 20% Cap on Non-Homestead Appraisals
Homestead property has long benefited from a 10% annual cap on appraised value increases. Commercial owners, landlords, and second-home owners had no equivalent. SB 2 added a circuit breaker for them: the appraised value of non-homestead real property cannot increase by more than 20% from the prior year.11State of Texas. Texas Tax Code TAX 23.231
The cap applies only to properties below an inflation-adjusted value ceiling. For 2024 the ceiling was $5 million; for 2025 it rose to $5,160,000; for 2026 it is $5,320,000.12Bexar Central Appraisal District. Circuit Breaker Limitation on Non-Resident Homestead Property Value Increases That covers most small commercial properties, rental homes, and undeveloped lots.
The provision expires on December 31, 2026.11State of Texas. Texas Tax Code TAX 23.231 The 89th Legislature filed HB 202 to make the cap permanent, contingent on voter approval of a related constitutional amendment.13Texas Legislature Online. 89th Legislature HB 202 – Introduced Version If the ballot measure fails, non-homestead properties lose the protection starting in 2027 and appraisal districts can again raise values by any amount the market supports.
Business Personal Property Exemption Rises to $125,000
Texas taxes tangible business personal property such as inventory, equipment, furniture, and machinery. Before 2026 the exemption sat at $2,500, low enough to catch nearly every operating business. The 89th Legislature passed HB 9, paired with Proposition 9, raising the exemption to $125,000 effective January 1, 2026.
A restaurant owner whose kitchen equipment, furniture, and supplies total less than $125,000 no longer owes personal property tax on any of it. Businesses under the threshold do not need to file a full rendition; they can submit a statement with an estimated value to the appraisal district. Businesses above the threshold must still file a complete rendition by April 15. Missing that deadline can trigger a 10% penalty and jeopardize the exemption. Only tangible assets count toward the total; intangible property such as software licenses, warranties, and intellectual property is excluded.
How to File the Homestead Exemption
Claiming the homestead exemption requires filing Form 50-114, the Residence Homestead Exemption Application, with the appraisal district in the county where the property sits.14Texas Comptroller of Public Accounts. Residence Homestead Exemption Application Your Texas driver’s license or state-issued ID must show the same address as the property. If it does not match, you can request a waiver from the chief appraiser, but a matching address is the default rule.
On the form you provide the date you began occupying the property as your principal residence, the names of all owners on the deed, and the property’s identification number, which appears on prior tax statements or the appraisal district’s online search. Most districts accept applications by mail, in person, or through an online portal.
The filing deadline is April 30. The statute says “before May 1,” so waiting until May means missing it for that tax year.3State of Texas. Texas Tax Code TAX 11.43 – Application for Exemption A chief appraiser can grant up to a 60-day extension for good cause, but plan around the April 30 date.
If you missed the deadline or never filed, you have not lost everything. Late applications are allowed for up to two years after the delinquency date for the taxes on the property. Once approved, the appraisal district notifies the tax collector, who must refund any overpaid taxes within 60 days without a separate refund request.15State of Texas. Texas Tax Code TAX 11.431 – Late Application for Homestead Exemption Homeowners who bought two or three years ago and never applied should file immediately to recover what they can.
Protesting Your Appraisal
Every spring, appraisal districts mail notices with the proposed value of your property for the coming tax year. If the value looks too high, you can protest. The deadline for a written notice of protest is May 15 or 30 days after the appraisal district mailed your notice, whichever is later.16State of Texas. Texas Tax Code TAX 41.44 – Notice of Protest Form 50-132 works, but any written notice that identifies the property and states your disagreement satisfies the requirement.17Texas Comptroller of Public Accounts. Appraisal Protests and Appeals
Most appraisal districts offer an informal conference with a staff appraiser before any formal hearing. Many protests settle here at no cost. Bring comparable sales data, photos of conditions that affect value, and any independent appraisal you have. If that does not resolve the dispute, the case goes to the Appraisal Review Board, where testimony is under oath and you can present contracts, repair estimates, photographs, and loan documents. You can appoint someone to represent you by filing Form 50-162.17Texas Comptroller of Public Accounts. Appraisal Protests and Appeals Professional property tax consultants take cases on contingency, typically charging between 12% and 50% of the tax savings they achieve.
What Happens If You Pay Late
Property taxes are due by January 31. On February 1 the bill becomes delinquent and penalties start accumulating right away:
- February: 6% penalty plus 1% interest
- March through June: an additional 1% penalty and 1% interest each month
- July 1: the penalty jumps to a flat 12%, and interest continues at 1% per month
By midsummer, a homeowner who missed January is facing 12% in penalties plus 6% in accumulated interest on top of the original tax.18State of Texas. Texas Tax Code TAX 33.01 – Penalties and Interest There is a harsher penalty for homestead exemption fraud: if the appraisal district cancels the exemption because the property was not actually your principal residence, the delinquent taxes carry a 50% penalty instead of the standard schedule.