Get to Know the Details: Texas Homestead Exemptions, 2023 Updates

 Here’s what you need to know about the recent 2023 updates to the Texas homestead exemption:

• The homestead exemption amount will more than double from $40,000 to $100,000.
• Homeowners will also see hundreds in savings, on average, from school tax rate compressions.
• Those aged 65 and older or disabled will receive their extra $10,000 benefit in addition to the new $100,000 exemption.

Why You Should File for a Homestead Exemption

The homestead exemption lowers your tax bill by protecting a percentage of the property’s value from taxation. As long as you own and reside in it, the exemption applies to a house, condominium, or manufactured home on owned or leased land. If you own the land and use it for residential purposes (i.e., a yard), the exemption can include up to 20 acres. If you plan to (or recently did) purchase a home in Texas as your primary residence, you don’t want to miss out on this valuable exemption.

2023 Texas Homestead Exemption Updates

Exemption Increase

The most recent homestead exemption of $40,000 was approved in May 2022. SB2 more than doubles that amount to $100,000, equaling hundreds in savings on average for homeowners. If you already have a homestead exemption, these benefits are applied automatically with no action needed from you. It’s important to note that the 10% appraisal cap for homestead exemptions has not changed with these proposals.

School District Rate Reduction

SB2 also introduces a provision for rate compression in the school district’s maintenance and operations (M&O) tax rate for all properties, including homesteads. As a homeowner, the M&O property tax rate would be reduced by 10.7 cents for every $100 of your property’s valuation. If your property’s assessed value is $350,000, you could see up to $375.50 in savings.

Aged 65 and Older or Disabled

Texan homeowners aged 65 and older or with disabilities will continue to receive their extra $10,000 exemption in addition to the new $100,000 increase. This corrects a previous oversight when the exemption was raised to $40,000 and excluded these groups. The proposed change to Legislation will provide their missed benefits and automatically recognize future increases.

How to File a Homestead Exemption

Submit a homestead exemption application with the county appraisal district where your property is located by April 30 of that tax year. Include supporting documents (pg. 3, Homestead Exemption Application) and a copy of a state-issued ID matching the property’s address. You’ll also need to confirm that you do not claim an exemption on another residence, in or outside of Texas. Once approved, you won’t need to file again unless notified by the county appraiser.

In addition to applying for an exemption, you can lower your tax bill by protesting the property valuation done by the county appraisal district. For assistance with this, contact the tax advisors at Gill, Denson & Company. Visit GillDenson.com for more information.