Elections 2022Taxes & SpendingHere’s a Look at the Property Tax Items on the May 7 Constitutional Amendment Ballot

The two propositions boost existing property tax exemptions available for Texas homeowners.
April 25, 2022
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Early voting for the May 7 election begins today — and while the ballot mostly consists of local elections, two property tax-related items are on statewide ballots as constitutional amendments.

Passed as joint resolutions during the 87th legislative session, both items require approval by Texas voters to amend the constitution.

The ballot language reads:

  • Proposition 1 – “The constitutional amendment authorizing the legislature to provide for the reduction of the amount of a limitation on the total amount of ad valorem taxes that may be imposed for general elementary and secondary public school purposes on the residence homestead of a person who is elderly or disabled to reflect any statutory reduction from the preceding tax year in the maximum compressed rate of the maintenance and operations taxes imposed for those purposes on the homestead.”
  • Proposition 2 – “The constitutional amendment increasing the amount of the residence homestead exemption from ad valorem taxation for public school purposes from $25,000 to $40,000.”

The first proposition centers on elderly and disabled homeowners, bringing their tax rate compression in line with the legislature’s 2019 reforms passed in House Bill (HB) 3. That compression did not apply to these homeowners when HB 3 initially passed because of existing reductions.

But this item would provide the same percentage reduction, through rate compression, that standard homeowners received from HB 3. The school finance system in Texas is like a seesaw, with state funding on one side and local school district property tax funding on the other. When the state injects more of its own funds it lowers the school tax burden on the opposite side, known as compression.

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It is estimated that the average elderly or disabled homeowner would see a $110 first-year reduction in their tax bill followed by a $125 reduction the following year.

The amendment also fixes the discrepancy that resulted in this category of homeowner benefiting from the initial bout of ISD compression, ensuring that they will benefit from future buydowns without their own legislation. If passed, it will become effective in January 2023.

Texans with elderly homestead exemption status total 1.8 million, while those with disabled status total 180,000.

Meanwhile, Proposition 2 increases the standard school district homestead exemption from $25,000 to $40,000 — estimated to yield $175 in property tax savings for an average homeowner. Savings will vary based on the value of each home.

Nearly 5.7 million homeowners will benefit from this item should it pass next month.

Heading into next session, the Texas legislature has earmarked $3 billion in its federal coronavirus aid for “property tax relief,” possibly in the form of continued tax rate compression.

This year’s property appraisals are beginning to hit mailboxes, and homesteads across the state are seeing between 20 percent and 50 percent increases in their valuations. Property owners have until mid-May to protest their valuations, but the amount they’ll pay in property taxes will ultimately be decided by their local elected officials who set the tax rates in August and September.

If both pass, only Proposition 2 will apply retroactively to this year’s tax bills. But some elderly and disabled homeowners, namely those who’ve had that exemption in place for a while, will not immediately see Proposition 2’s tax bill reduction until the legislature acts again in 2023. Because elderly and disabled homeowners are categorized in the state constitution separately from those with standard homestead exemptions, they require separate action to ensure standard exemptions apply to their bills, too.

Early voting for the May 7 election runs through Tuesday, May 3.

Editor’s Note: This article has been updated to include additional context on Proposition 2.

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Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.