By State Rep. Brooks Landgraf
On June 27 the Texas legislature convened at the Texas Capitol building for a special legislative session called by Governor Abbott to specifically address property tax relief.
The result? We fulfilled our promise to put money back in the pockets of hard-working Texas taxpayers. In fact, we took the largest budget surplus in Texas history and turned it into the largest tax cut in Texas history, not only cutting property taxes, but the franchise tax as well. Yes, everything is bigger in Texas, including our tax cuts.
As your state representative, I proudly co-authored legislation which will provide $12.7 billion of property tax relief for Texans (combined with other tax relief measures, the total will be closer to $18 billion). The benefits of this legislation — which was approved by the Texas legislature last week — will be far-reaching, positively impacting Texas families and small businesses alike.
The legislative package includes House Joint Resolution 2, Senate Bill 2, and Senate Bill 3. SB 2 and SB 3 must now be signed by Governor Abbott to go into law while HJR 2 — which provides the constitutional authority necessary to enact several provisions of SB 2 — must be approved by Texas voters in November.
SB 2 increases the homestead exemption from $40,000 to $100,000 and taps surplus revenue to provide $12.7 billion in property tax relief over the next 2 years by reducing school district maintenance and operations (M&O) tax rates by 10.7 cents per $100 of taxable value to “buy down” school district M&O rates. Additionally, SB 2 creates a 20% appraisal cap applicable for tax years 2024, 2025, and 2026 for non-homestead properties with an appraised value of $5 million or less. (Note the current 10% appraisal cap that applies to your homestead remains in place.)
Importantly, SB 2 also increases the number of directors on an appraisal district’s board of directors from five to nine, and three of them must be directly elected by voters in counties with 75,000 or more residents, which includes Ector County.
SB 2 and HJR 2 provide immediate relief and lasting reform. We’re not just using surplus revenue to buy down property taxes for the next two years, we’re seeking to permanently amend the constitution to increase the homestead exemption by 150%! Not only that, but the changes made to appraisal boards will add much needed transparency and accountability. Appraisers have a major role in determining how much Texans have to pay in property taxes, and anyone with that amount of power should have to be elected by the people.
SB 3 increases the “no tax due” threshold for franchise tax purposes to $2.47 million, ensuring businesses operating in Texas with revenue under this figure in a given tax year do not owe any franchise tax or have to file a franchise tax report. The current statutory “no tax due” threshold is $1 million.
I am certainly proud of the significant reform to the franchise tax made by SB 3, however, I would have liked to see a larger cut and a plan to phase out and repeal the tax. The franchise tax is bad policy that hurts Texas businesses and our economy because it is levied irrespective of whether businesses make a profit. For that reason I filed HB 2213 earlier this year to repeal the franchise tax altogether. Even though I’m not totally satisfied, cutting the franchise tax by doubling the no tax due threshold is a huge step in the right direction and a very good thing for Texas.
What we achieved over the past few weeks is transformative and will herald unprecedented tax relief for Texans. I thank Governor Abbott for his leadership in prioritizing property tax relief for the people of Texas and for working hand in hand with Speaker Phelan and the Texas House of Representatives to get it done.
And while I’m certainly proud of these historic tax cuts, you have my word I will continue to work to provide even more property tax relief moving forward.
God bless Texas!
