Public School Taxes in Texas

If you have been a homeowner for any length of time in Texas, you know that the largest chunk of your yearly taxes went to public schools. Whether it was a separate bill or lumped together with the rest of your taxes due by the end of January, your wallet always took the largest hit from public school taxes. Since Texas has no income tax, property taxes have been relied upon to fund all education for decades. This is true for most states in the nation, and Illinois, New York, and Georgia have all been focused on how to deal with rising costs. Due to their outsized impact, these taxes often drew the ire of homeowners, which in turn, pushed for more reform.

Previous Tax Cuts

Thanks to growing pressure, Texas governor Greg Abbott began to float various ideas on how to deal with rising taxes. In 2023, an expanded homestead exemption was given to residents, raising the exemption from $40,000 to $100,000. This brought school taxes down to similar levels compared to MUD or county taxes. This was greeted with acclaim from many taxpayers, as it represented a significant cut to the largest bill that a Texan receives every year.

2025 saw another round of legislation, this time even greater breaks were proposed. Unsurprisingly, when given the chance, taxpayers voted in droves to land more tax breaks. This time, the homestead exemption increased to $140,000. This was supplemented by an over-65 exemption that jumped from $10,000 to $60,000. These senior exemptions could be combined with the traditional homestead to cut $200,000 in taxable value from the rolls of certain taxpayers. Many seniors found themselves paying no school taxes at all. Even for the average homeowner, school taxes were reduced to a level never seen before.

Gov. Abbott’s Five-Point Plan

After spearheading the 2023 and 2025 tax cuts, Governor Abbott looks to make even more drastic changes. The governor just announced his five-point plan to lower taxes across Texas. The headliner is the abolishment of property taxes on homes that would fund school districts. In essence, there would be no more local funding for schools, at least from homeowners. Sales tax could still be used to help fund schools. This would obviously be a boon for taxpayers, as it fully eliminates what was once the largest tax that was owed.

The five-point plan is as follows:

While the realism of eliminating school taxes is debatable, the rest of the points could be a boon for taxpayers. Local spending limits could keep the demand for property taxes in check, as local government would still collect property taxes if school taxes were eliminated. By requiring two-thirds of voters to approve tax increases, it would all but guarantee that a new tax increase is never seen again. The third point proposes that if 15% of voters support it, rollback elections against tax increases could be held. This is quite an easy threshold to make. The fourth point could be a mixed bag. While appraisal caps would certainly be a benefit, having five years between appraisals could be problematic. It is often the gulf between real value and assessed value that causes issues in property taxes. By extending appraisals to every five years, the potential for overvaluation of property is increased.

Lowering Taxable Value Protects Your Largest Investment

High property taxes are certainly bad if you wish to sell your home, but they are even worse if you want to keep it. This is especially true in high-demand counties like Harris, Travis, Dallas, and Denton. Investors, home flippers, and corporate landlords can disrupt existing neighborhoods. This leads to gentrification in many traditional communities and can price out seniors, the disabled, and working people. Appeals are one of the best ways to keep these challenges in check. This will allow you to sell your home at a better price later or give you a higher level of equity that you can borrow from. Money saved on taxes can also be used for improvements, which can then be used to raise your market value even more.

Too Good to be True?

While these seem like wins for taxpayers and relief from out-of-control spending, the practicality of abolishing school taxes and the other proposals is certainly questionable. As Texas has no income tax, the budget shortfalls would have to be made up with increases to the sales tax, which is already high in Texas. This puts pressure on the entire community, regardless of economic status. There is debate about whether the increased sales tax would actually exceed the savings handed down by eliminating school taxes. Currently, the state of Texas is funding school districts to make up for current tax cuts. This should work, as long as the state government is in a surplus, but if things reverse, there will be little that local governments can do to restore funding

Dan Patrick Offers an Alternative

The Lt. Governor, Dan Patrick, is also targeting tax relief, albeit in a more reserved manner. The main trust is Operation Double Nickel, which brings down the over-65 exemption to the age of 55, significantly increasing the population that can benefit from the reduction. In addition, the standard homestead exemption would increase once again, jumping to $180,000, offering large savings to homeowners of all ages. The Double Nickel proposal could meet things halfway between the unsustainable status quo and the overzealous complete removal of school taxes. It looks like this debate may come down to the voter, so it will be up to you to decide how things should go. This is as it should be, as Texans being empowered to control their taxes is a noble goal.

O’Connor Champions Fair Taxation and Reduction

For over 50 years, we at O’Connor have been encouraging Texans to do everything in their power to lower their taxes. We believe in fair taxation for all and have always worked with our clients to get reductions within an imperfect system. With changes constantly coming to property taxes in the Lone Star State, we have found even more opportunities to help our clients protect their homes and investments. While the state and counties can be unpredictable, it is up to you, the taxpayer, to take matters into your own hands.

While exemptions are increasing, they can be improved upon with property tax appeals. In fact, these two go together like chocolate and peanut butter when it comes to protecting your wallet. A well-executed property tax appeal can lower the taxable value of your home to its fair market value, while exemptions can then drop this even further. This allows you to save even more. If exemptions continue to increase, or property taxes are reformed, appeals can only help get you bonus savings in the future. If you sign up with us, we will make sure that you are always using the most optimal exemptions, along with ensuring that your home has been appraised correctly. If we find that you have been missing out on an exemption, we can help you get it and even retroactively apply it to past taxes with a correction of the appraisal roll.

We will also automatically protest your property values every year, ensuring that your taxable value is not randomly increased by your appraisal district. There is never a charge to join us, and we will give you exemption advice free of charge. You will only be charged a contingency fee on your winnings if we can lower your taxes with an appeal. This means that there is no risk to you if you wish to attempt to lower your taxes even further. We will keep an eye out in the new year for future developments and help you integrate any changes to get you the best deal on your property taxes.