Introduction to Texas Tax Cuts
Voters in Texas are expected to vote in November on a series of tax cuts for homeowners and businesses. The tax cuts, which were approved by the Texas Legislature, aim to provide relief to homeowners and businesses by reducing the amount of property taxes they pay. If voters agree to the tax cuts, homeowners will see increased breaks on the taxes they pay toward school districts, with those above the age of 65 or living with disabilities seeing even bigger cuts.
How the Tax Cuts Will Work
The tax cuts will work by increasing the state’s homestead exemption, which is the slice of a home’s value that can’t be taxed to pay for public schools. Lawmakers raised the exemption from $100,000 to $140,000. This means that the owner of a typical Texas home, valued at $302,000, would save about $490 on their school property taxes. Homeowners over the age of 65 or those with disabilities would see even greater savings under a proposal to raise a separate homestead exemption for those owners from $10,000 to $60,000.
Benefits for Business Owners
Business owners will also see breaks under the tax cuts. Lawmakers approved legislation to exempt up to $125,000 of businesses’ inventory from being taxed by school districts, cities, counties, or any other taxing entity. Under current law, businesses don’t have to pay taxes on that property if it’s worth $2,500 or less. The state would pick up the tab for the amount of property tax revenue school districts would have collected from businesses if not for the increased exemption.
Concerns About the Tax Cuts
While the tax cuts may provide relief to homeowners and businesses, some lawmakers and budget analysts are concerned that they may come back to haunt the state. The tax cuts will be paid for using a one-time budget surplus, which may not be available in the future. This could lead to a squeeze on the state budget and potentially impact other government services. Additionally, the tax cuts may not benefit all Texans, particularly renters, who do not own their own homes and will not see direct relief from the tax cuts.
Local Property Tax Squeeze
The tax cuts may also have an impact on local property taxes. Lawmakers put tighter restrictions on local officials’ ability to raise property taxes in response to a natural disaster. They also put tighter limits on school districts’ ability to seek higher tax rates. Cities, counties, and other taxing entities must now include ballot language that reads "THIS IS A TAX INCREASE" if they ask voters to approve a tax-rate increase or bond proposition.
Conclusion
In conclusion, the tax cuts approved by the Texas Legislature aim to provide relief to homeowners and businesses by reducing the amount of property taxes they pay. While the tax cuts may provide short-term benefits, they may also have long-term consequences for the state budget and local government services. Voters will have the final say on the tax cuts in November, and it remains to be seen whether they will approve the measures. Regardless of the outcome, it is clear that the tax cuts will have a significant impact on the state of Texas and its residents.
