Issue
In 2019, REALTOR®-supported property tax reform legislation (Senate Bill 2) brought monumental changes to the state’s property tax system.
Local property taxes in Texas have increased dramatically over just the past few decades.
From 1998 to 2017, the total property tax levy statewide increased more than 211%–or $40.35 billion– according to the latest data from the Texas Comptroller available as of December 1, 2020.1
Part of the increase in local property tax revenue can be attributed to new property added to the appraisal roll and higher property values. However, an increase in property value should not be an automatic increase in property tax revenue.
If a local taxing entity needs more revenue, a more honest and transparent conversation needs to occur at the local level, so taxpayers completely understand why.
What does this mean for the real estate industry?
Texas has been a dominant force in the national economy, and housing affordability has been a contributing factor. But steep increases in property taxes threaten this affordability.
An April 2020 analysis of housing affordability trends in Texas found that “… housing in Texas is gradually becoming less affordable” and one reason may be “Texas’ property taxes are very high compared to other states.”2
Texans still need more clear information about how their properties are assessed for property tax purposes and how their local governments collect and spend those tax revenues.
The more Texas residents—owners and tenants alike— understand that process, the better they will be able to engage with decision-makers and ensure their voices are heard.
Texas REALTORS® position
Texas REALTORS® supports continued monitoring of the implementation of law changes that resulted from passage of the Texas Property Tax Reform and Transparency Act of 2019, and a case-by-case evaluation of minor modifications to those statutes that may be deemed appropriate and necessary during the 2021 rollout phase.
Legislative outlook
Lawmakers are expected to take up legislation that would further clarify the reform’s intent to inform taxpayers and increase taxpayer engagement in the property tax process.
Historical perspective
In 2019, the Texas Legislature agreed that property tax reform is critical, passing The Texas Property Tax Reform and Transparency Act (Senate Bill 2). The new law implements several measures that enhance transparency for taxpayers by providing more information about how tax rates are set and how to engage in the rate-setting process that determines your property tax bill.
1 Biennial Property Tax Report for 2016 and 2017, Texas Comptroller of Public Accounts, http://comptroller.texas.gov/ taxes/propertytax/docs/96-1728.pdf
2 “Can Texas afford to lose its housing affordability advantage?” Kinder Institute for Urban Research at Rice University, April 14, 2020. http://kinder.rice.edu/urbanedge/2020/04/14/can-texasafford-lose-its-housing-affordability-advantage