Understanding Texas Property Tax Exemptions & How They Could Save You Money

Here’s what you need to know about how Texas property tax exemptions can save you money:

• Texas property tax exemptions lower your annual property tax bill by reducing your home’s taxable value.
• The general Homestead Exemption in Texas significantly reduces school taxes and can lower your taxable value by $100,000.
• Texas offers seniors and disabled homeowners an additional $10,000 exemption and freezes their school taxes.
• The Veterans with Disabilities Exemption is a tiered system of property tax relief based on the level of assessed disability, up to a 100% reduction.
• The solar exemption encourages green energy use by exempting the added home value from solar devices from property taxes.
• Landowners engaged in agriculture or timber production can see significant savings by having their land taxed based on productivity value rather than market value.
• Homeowners with properties damaged by declared natural disasters may receive temporary property tax relief based on a damage assessment rating.
• The property tax experts at Gill, Denson & Company are ready to assist you in finding potential reductions on your tax bill.

How Can Texas Property Tax Exemptions Save You Money?

Property tax exemptions are an excellent way for homeowners to save money on their annual property tax bill. Exemptions apply to a portion of the home’s taxable value, decreasing the overall taxable amount and lowering your tax bill. There are various exemptions available, each with its own eligibility requirements. You may be eligible for one or more exemptions at a time. Here are the different property tax exemptions you can apply for in Texas if you meet the eligibility requirements:

Homestead Exemption

The general Homestead Exemption is the most well-known property tax break for Texas homeowners. If you own your home and it’s your primary residence, you likely qualify. This exemption directly reduces the taxable value of your home by $100,000 and applies a 10% annual appraisal cap. It is particularly advantageous in reducing school district taxes, but it can also apply to other local taxes. Every eligible Texas homeowner should take advantage of this exemption.

65 or Older or Disabled Homestead Exemption

Texas provides an additional $10,000 exemption for senior citizens and homeowners with disabilities through the 65 and Older or Disabled Homestead Exemption. You must be age 65 or older or meet the federal definition of disabled (and qualify for the general homestead exemption) to be eligible. In addition, you’ll benefit from a tax ceiling on your school taxes. This means the amount you pay in school property taxes will not increase in subsequent years, even if your home’s appraised value rises. 

Veterans with Disabilities

Texas remains committed to honoring veterans with disabilities through the Veterans with Disabilities Exemption. The exemption amount is determined by the percentage of disability assigned by the U.S. Veterans Administration. A tiered system is in place: the higher the disability rating, the greater the property tax exemption amount. Veterans with a 100% disability rating may be eligible for a full exemption from property taxes on their homestead, meaning they may owe no property taxes at all.

Solar Property Tax Exemption

Texas also offers a Solar Property Tax Exemption for homeowners who equip their primary residence with solar-powered energy devices. The increased value of your home due to these devices can be exempt from property taxes. Investing in solar energy can reduce your energy bills, contribute to a greener environment, and lower your property taxes. This means you can potentially save money over the device’s lifespan while increasing your home’s value.

Texas Agricultural & Timber Exemption

If you own land and actively use it for agriculture or timber production, you may apply for the Texas Agricultural & Timber Exemption. This isn’t technically an exemption but a special valuation method. The land is taxed based on productivity value (income generated from eligible activities) rather than market value (what it could sell for). This can equate to savings of thousands of dollars depending on acreage and land use, supporting farming, ranching, and timber industries across Texas.

Natural Disaster Temporary Exemptions

Texas understands that natural disasters can devastate homeowners. To help with recovery, Temporary Disaster Exemptions are available for properties damaged by declared natural disasters such as wildfires, hurricanes, and floods. These exemptions provide temporary property tax relief for a limited period following the disaster, helping homeowners to recover. Specifics of these exemptions, including duration and percentage reduction, will vary depending on the declared disaster.

Freeport and Goods-in-Transit Exemptions

The Freeport Exemption applies to certain tangible personal property held in Texas for 175 days or less for assembling, processing, manufacturing or fabrication. This includes goods, wares, ores, merchandise, and certified air carrier aircraft and repair parts. The goods must be “acquired in or imported” into Texas and then moved out of the state within the time frame. Businesses must apply for this exemption annually with their local appraisal district.

The Goods-in-Transit (GIT) Exemption covers tangible personal property temporarily stored in Texas and then transported to another destination in or out of the state within 175 days. This also requires an annual application. Essentially, Freeport is for temporarily stored goods awaiting export, while GIT is for goods actively passing through Texas.

Depending on your location, you may need to apply to local taxing jurisdictions, in addition to the county appraisal district, which is different from other exemptions.

Texas property tax exemptions are not automatic – you need to apply for them. Understanding the different types of exemptions available and determining which ones you qualify for is the first step toward significant savings.

You can also reduce your property tax bill by protesting your property tax assessment, especially if you received an exemption that is not reflected on your bill. As Texas property tax advisors, we understand the intricacies of these exemptions and can help you determine if you’re eligible for further reductions. Don’t leave money on the table – contact Gill Denson & Company today!