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The Texas legislature has delivered on additional ad valorem tax relief for the citizens of Texas. On June 16, 2025, Governor Greg Abbott signed legislation – Senate Bill 4 and Senate Bill 23 – into law, increasing the mandatory homestead exemption required for all taxing authorities from $100,000 to $140,000. The homestead exemption for homeowners over 65 or with disabilities is also increased from $10,000 to $60,000, for a combined exemption of up to $200,000 for eligible individuals.
This relief will be particularly welcome for first-time home buyers and people owning homes at the lower end of the value spectrum, where a larger percentage of the value of their homes will be exempt from real property tax. Homeowners who escrow for taxes with their lender may not feel the tax reduction in terms of monthly payment, however, until next year, when their escrow account will be reanalyzed. Any excess amount collected for taxes in excess of what is permitted would be refunded at that time.
Also, homeowners in certain jurisdictions won’t see a difference in their real property taxes because they live in taxing jurisdictions that already offer a homestead exemption that exceeds the new mandatory exemption amount, which was already permitted under Texas law.
Importantly, the new exemption levels are contingent upon voter approval of a constitutional amendment, which will appear on the ballot in the November 2025 election. If approved, the changes will apply retroactively to the 2025 tax year.