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Texas Homestead Exemption Set for Major Increase: What You
Need to Know Overview
In a move that promises to alleviate the financial pressure of rising property taxes for homeowners, the Texas House and Senate have passed a property tax relief plan pending voter approval on Nov 7th, which would significantly increase the homestead exemption from $40,000 to $100,000. For the average homeowner, this would translate to annual savings of approximately $1,400 on property taxes.
What Is Homestead Exemption?
A homestead exemption is a legal provision that reduces the potential of homeowners losing their home to creditors and potential loss in the event of the homeowner's spouse's death. It achieves this by reducing the appraised value of the primary residence, subsequently lowering the property tax liability.
Will the Proposed Increase in Homestead Exemption Provide Significant Tax Relief for Homeowners?
The proposed increase in homestead exemption from $40,000 to $100,000 is monumental. It relieves many homeowners grappling with increasingly burdensome property taxes as home values have skyrocketed in recent years.
If the public votes favor this change in the upcoming November 7th election—a widely expected outcome—the average homeowner can look forward to an annual tax saving of around $1,400.
Will the New Legislation Offer Tax Relief for Non-Homesteaded Properties as Well?
The tax relief isn't just for homeowners. The legislation also includes a 20% circuit breaker on appraised values for non-homesteaded properties valued at $5 million and under, encompassing residential and commercial properties. This is set to be a 3-year pilot project.
Could the Proposed Legislation Also Provide a Lifeline for Small Businesses Through Franchise Tax Relief?
For counties with a population of 75,000 or more, a significant aspect of the new legislation is the creation of newly elected positions on local appraisal boards. This democratization of the appraisal process is intended to provide a more transparent and accountable system for property valuation.
How Will the Proposed Tax Relief Plan Specifically Benefit Seniors?
Seniors are not left out of this tax relief plan. The senior exemption is slated to rise even more than the general homestead exemption, going from its current level to a new cap of $110,000. This provides additional financial relief for one of the most vulnerable segments of the population.
Conclusion
The proposed changes to Texas property tax laws stand to benefit a broad swath of the population, from young families and seniors to small business owners and non-residential property owners. As the November 7th vote approaches, Texas residents must familiarize themselves with the proposed changes to make an informed decision that could significantly impact their financial future.
Disclaimer: The proposed tax changes are subject to approval in the upcoming election. Please consult a tax advisor for personalized advice.
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