An influential Texas Senator took to X recently to ask the following question: “How much money is dedicated in the [2026-27] State of Texas Budget for Property Tax Relief, really?”

The answer: appropriators set aside more than $10 billion this session for property tax relief purposes, which is one of the largest reductions in recent times.

What this means for the everyday Texan will vary, but in general, Texas’ $10 billion tax cut is expected to lower the average homeowner’s tax bill by $484 annually while also reducing the burden on elderly and disabled homeowners by nearly $950 annually. Those tax savings should provide taxpayers with much-needed breathing room, assuming they aren’t eroded in part or in full by irresponsible local government action.

Aside from the tax cut’s size and effect, there’s something else to note about it too, which is the form it takes (i.e., rate compression v. homestead exemption). This aspect is detailed in Rider 76 of the state’s new two-year budget (see pg. III-31), which provides the following:

  • “…an estimated $3.5 billion for the 2026-27 biennium to maintain property tax relief provided by the Eighty-eighth Legislature following the enactment of House Bill 3, Eighty-sixth Legislature, Regular Session, and the enactment of Senate Bill 2 and HJR2, Eighty-eighth Legislature, Second Called Session, and subsequent voter approval of the associated constitutional amendment.”
  • “…an estimated $1,840.0 million for the 2026-27 biennium from Foundation School Fund No. 193 for compression of district property tax rates due to district property value growth, pursuant to Texas Education Code, Sections 48.2551 and 48.2552 (a) and (b).”
  • “…an estimated $767.1 million for the 2026-27 biennium from Foundation School Fund No. 193 to reduce the state compression percentage by 3.31 percentage points, due to state savings resulting from the limitation on district Maximum Compressed Rates (MCRs) during the prior biennium, pursuant to Texas Education Code, Section 48.2552(c).”
  • “Included in amounts appropriated above and in Subsection (a) is $3,900,000,000 for the 2026-27 biennium to provide property tax relief, contingent on the enactment of SB 4 and SJR 2; SB 23 and SJR 85; HB 9 and HJR 1; or similar legislation relating to providing property tax relief through the public school finance system by the Eighty-ninth Legislature, and subsequent voter approval of the associated constitutional amendment proposed by the legislation to exempt a portion of the market value of business personal property from ad valorem taxation by a school district and to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district.”

Based on this information, a few things appear evident. First, Texas’ new tax cut includes monies for both prior commitments as well as new promises. The reader will have to make his or her own determination about whether this is a controversial point or not; but objectively speaking, it is a fact that the budget includes ~$10 billion for tax cuts in the 2026-27 biennium. Second, this funding will be utilized for both rate compression and a residence homestead exemption increase as well as a bit of personal property tax relief. So there appears to be a blend of different approaches here. Third, the inclusion of rate compression means that renters may see a small amount of relief eventually, as landlords pass along any savings in the form of reduced rent. This could help blunt the criticism levied by some in the media.

And so, that’s where things currently stand, Texas. Now it’s your turn to let policymakers and others know what you think about the current state of affairs.

What are your thoughts on Texas’ $10 billion tax cut? Is it enough? Will it help you? Do you think local governments will erode it away through rate hikes and bond elections? Email me your thoughts at [email protected].