Important issues for Texas homeowners
What does the property-tax cut mean for me?
Frequently asked questions
In May 2006, the Texas Legislature passed comprehensive school-finance reform that lowers school property taxes by about $7 billion over the next three years. What does that mean for you? Here are answers to some frequently asked questions:
How much is the tax cut?
The rate for public school taxes will be reduced $0.17 per $100 of value for the 2006 tax year and $0.33 for the 2007 tax year.
Were other property taxes lowered by this legislation?
No, only public school taxes. Taxes for cities, counties, and other taxing authorities are not included in this tax cut.
What is the current public school tax rate?
The vast majority of school districts had reached the tax-rate cap of $1.50 per $100 of value. That $1.50 rate will go down to $1.33 for the 2006 tax year and down to $1 for the 2007 tax year.
My school tax rate is higher than $1.50 and has been for several years. How can that be?
The $1.50 cap applies to school maintenance and operations. A school district can exceed $1.50 if voters in that district pass bonds to pay for new schools and facilities. Amounts approved by local voters for school bonds are not affected by the tax cut.
My home’s appraisal value keeps going up. Won’t that negate the tax savings?
No. Your appraisal value was going up regardless of whether a tax-rate cut passed. Appraisals go up because property values up. The appraisal districts are charged with valuing property fairly and accurately. If the tax rate had not been cut, you would have paid tax at the higher tax rate on the same appraisal you received this year. Consider the following example of a home valued at $150,000 in 2005 that goes up in value 10% a year:
Tax year |
2005 |
2006 |
2007 |
Appraised value |
$150,000 |
$165,000 |
$181,500 |
Homestead exemption |
$15,000 |
$15,000 |
$15,000 |
Taxable value |
$135,000 |
$150,000 |
$166,500 |
Tax rate of $1.50 per $100 valuation |
$2,025 |
$2,250 |
$2497.50 |
Tax rate of $1.33 per $100 valuation |
|
$1,995 |
|
Tax rate of $1 per $100 valuation |
|
|
$1,665 |
As you can see, the owner of this home would pay $832.50 more taxes if the Legislature had not reduced the tax rate. Even if you only compare total tax from 2005 to 2007, this homeowner’s tax bill is $360 lower despite the appraisal rising 10% each year.
Isn’t this just a shell game? My tax rate goes down, but my appraisal goes up.
Tax rates and appraisals are separate components of your tax bill. When appraisals jump significantly, taxing authorities—like school districts, cities, and counties—can lower their tax rates, so that suddenly higher appraisals don’t equate to suddenly higher tax bills. Most do not.
Couldn’t the Legislature have done anything else to prevent taxes from creeping back up?
The Legislature did pass a measure that requires a vote by the people for local leaders to raise the school portion of property taxes more than $0.04 per $100.
What’s to stop the appraisal district from raising home values to boost tax revenues?
If you believe your home has not been fairly and accurately appraised, you can file a protest to be heard by the appraisal review board. (The deadline for filing protests typically is May 31 each year.) If you disagree with the appraisal review board’s decision, you can submit your case to binding arbitration.
You can learn more about how this historic property-tax cut benefits Texans in this brochure (PDF).
For more information, we invite you to visit TruthAboutTexasTaxes.org.
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