Voters approved Proposition 4 to lower taxes for Texas homes and businesses.
Voters in Texas decisively adopted a constitutional amendment on Tuesday that would transform the way public schools are funded, possibly saving homeowners and businesses thousands of dollars year in property taxes.
Texas Embraces $18 Billion Tax Relief!
Houston Republican Senator Paul Bettencourt, who authored the measure, said in an emailed statement, “Fighting for property tax reform is something Lt. Governor Dan Patrick and I have been doing together for almost 20 years in the making.” It’s great that the public is getting the property tax cut they’ve long desired and earned after everyone’s hard work. It’s wonderful to return people’s money from budget overages.
Decision Desk HQ reports that 84% of voters supported Proposition 4, a $18 billion Property Tax Reduction decrease plan, in Tuesday’s constitutional amendment election. Estimated votes for the amendment was 89%, with about 1.1 million in favor.
School district property taxes, which account for the vast majority of a landowner’s tax burden in Texas, are the primary target of the measure.
Texas Home Tax Break: $7.1 Billion Game-Changer!
By “compressing” local income that would have been collected by school districts and substituting them with state funds, the initiative will provide those districts with $7.1 billion to cut their tax rates. This would result in a reduction of 10.7 cents per $100 in property value for the tax rates used by school districts to fund operating expenditures like teacher salaries.
Furthermore, the measure more than doubles the homestead exemption on school district taxes, which is the portion of a property’s value that is free from Taxation in order to fund public schools. The constitutional amendment raises the exemption from $40,000 to $100,000.
Bettencourt, a Republican from the Houston area, is the Senate’s chief tax-cut proponent, and his office estimates that these breaks, which will be applied to landowners’ 2023 tax bill, will result in tax savings of more than $2,500 over the next two years for the typical Texas homeowner, with larger savings for seniors. The monthly cost would be just over $100.
Despite Texas’ image as a low-tax state, due primarily to the lack of a state income tax, landowners here pay among of the highest property tax bills in the nation, according to the conservative Tax Foundation. The top Republicans in the state have made lowering property taxes a primary priority.
With Texas’ robust economy and an overabundance of federal COVID-19 relief money, the state government has a record $33 billion surplus this year, which Republicans have pledged to spend for tax cuts. The $18 billion tax cut package was delivered to Governor Greg Abbott by Republican lawmakers after months of infighting, but it still needed voter approval.
In addition, $5.3 billion is included to cover the cost of tax cuts that were authorized by Parliament in prior years.
Proposition 4: A Win for Taxpayers with 20% Cap!
Voters passed Proposition 4’s other tax reforms, including a new annual ceiling on the growth of property values for some businesses, which helps determine an owner’s tax burden.
There will be a three-year cap of 20% on the annual increase in value for owners of commercial, mineral, and residential properties (such as rental houses and apartment complexes) worth at less than $5 million who do not qualify for a homestead exemption. Unlike homeowners, who are limited by state law to an annual increase of no more than 10% in the taxable value of their homes, companies formerly had no such limit.
Unless politicians and voters renew it, the value restriction on commercial properties would disappear in 2026.
The number of firms exempt from paying the state’s franchise tax will increase as a result of Proposition 4. In addition, counties with over 75,000 population will be able to have elections for three board members of their local appraisal districts. These positions were previously appointed.
FAQs
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What is Proposition 4 in Texas, and what does it aim to achieve?
Proposition 4 is a constitutional amendment in Texas that garnered 84% voter support in a recent election. Its primary goal is to bring about a significant transformation in the funding of public schools, potentially leading to substantial property tax savings for homeowners and businesses.
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Who initiated Proposition 4, and what is their perspective on its passage?
Houston Republican Senator Paul Bettencourt authored Proposition 4. He has been advocating for property tax reform alongside Lt. Governor Dan Patrick for nearly two decades. Senator Bettencourt expressed satisfaction with the public’s support, emphasizing that it fulfills a long-desired property tax cut after years of collective effort.
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What specific changes does Proposition 4 introduce to school district property taxes?
Proposition 4 addresses school district property taxes by “compressing” local income collected by districts and substituting them with state funds. This initiative is expect to provide $7.1 billion to school districts, enabling them to reduce tax rates. The amendment also doubles the homestead exemption on school district taxes, raising it from $40,000 to $100,000.
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How will homeowners benefit from Proposition 4, and what are the estimated savings?
Senator Bettencourt’s office estimates that the tax breaks resulting from Proposition 4, applicable to landowners’ 2023 tax bills, will lead to savings of over $2,500 over the next two years for the typical Texas Homeowner. Larger savings are anticipate for seniors, with a monthly cost reduction of just over $100.
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Why is property tax reform consider essential in Texas, despite its reputation as a low-tax state?
Despite Texas being perceived as a low-tax state, property owners face some of the highest property tax bills nationally. The conservative Tax Foundation notes this disparity. Lowering property taxes has been a top priority for leading Republicans in the state.
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How does Proposition 4 address property value growth for businesses, and what is the impact?
Proposition 4 introduces a new annual ceiling on the growth of property values for some businesses. Including commercial, mineral, and residential properties under $5 million without a homestead exemption. This entails a three-year cap of 20% on the annual increase in value. Unlike homeowners, businesses previously had no such limit.
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What additional changes does Proposition 4 bring, apart from school district tax reforms?
Apart from school district tax reforms. Proposition 4 includes measures such as expanding the number of businesses exempt from the state’s franchise tax. It also grants counties with over 75,000 residents the ability to elect three board members for their local appraisal districts. Departure from the previous appointment system.
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How does the surplus in the Texas government’s budget contribute to Proposition 4?
With a record $33 billion surplus in the state government’s budget, resulting from a robust economy and federal COVID-19 relief funds. Republican lawmakers delivered the $18 billion tax cut package to Governor Greg Abbott. However, it required voter approval, which Proposition 4 successfully received.
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When will the property tax cuts authorized by Proposition 4 take effect?
The property tax cuts authorized by Proposition 4 are expect to take effect on landowners’ 2023 tax bills. Providing relief and savings in the coming years.
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What happens to the value restriction on commercial properties introduced by Proposition 4 in 2026?
The value restriction on commercial properties. As introduce by Proposition 4, is set to expire in 2026 unless by politicians and voters. This marks a critical aspect of the amendment’s impact on the long-term taxation landscape in Texas.
