When a homeowner in Tarrant or Bexar County opens the tax statement that arrives each fall, the line that matters most is near the bottom: the amount actually owed on the family home. Over the past two legislative cycles, Texas lawmakers have changed the math behind that number twice — first in 2023 and again in 2025 — and the changes are large enough that many homeowners have seen their school-tax bill fall even as their appraised value kept climbing. Understanding why takes a little arithmetic, but it is arithmetic worth doing.
This article walks through what the relief laws actually changed, how the two main levers — a bigger homestead exemption and a lower school tax rate — work together, and how a homeowner can estimate the effect on a specific bill. It does not predict any one family’s savings, because that depends on the home’s value, the local rates, and which exemptions a homeowner has filed for.
What the 2023 law changed
The centerpiece of the 2023 package was Senate Bill 2, which voters locked into the constitution by approving Proposition 4 that November. The law raised the school-district homestead exemption from $40,000 to $100,000 and used state dollars to “compress,” or buy down, school property tax rates. According to the Texas Comptroller’s analysis of the package, the state committed more than $12 billion to lower school rates by 10.7 cents per $100 of value for all homeowners and businesses.
Those two moves attack a property tax bill from different directions. The exemption shrinks the taxable value of a home before the rate is applied. Compression lowers the rate itself, which is set by the state-funded portion of school finance. The Comptroller estimated the combined relief saved the average homeowner well over a thousand dollars in the first year, with larger savings for homeowners who are 65 or older or who have a disability. Those figures are statewide averages, not guarantees for any single property.
What the 2025 law changed
In 2025, the Legislature went further. Voters approved a new round of constitutional amendments that fall. As Ballotpedia’s summary of Proposition 13 explains, the general school-district homestead exemption rose again, from $100,000 to $140,000. A companion measure, Proposition 11, increased the extra exemption for homeowners who are elderly or disabled.
The state has said the larger exemptions apply retroactively to the 2025 tax year, so the relief shows up on bills for that year rather than being delayed. The Lieutenant Governor’s office described the combined effect for seniors and disabled homeowners in a statement on the legislation. Because the exact dollar amounts depend on the version of the bills that ultimately took effect, a homeowner should confirm the figure that appears on their own appraisal notice rather than rely on any single press release.
How the exemption actually lowers your bill
The homestead exemption only reduces the value taxed for the school-district portion of a bill — and schools are the single largest piece of most Texas property tax bills. Here is the mechanism in plain terms. Suppose a home is appraised at $300,000. With a $140,000 school homestead exemption, the school district taxes only $160,000 of that value. The city, county, and any special districts generally tax the full value (minus any exemptions they separately offer), so the exemption does not erase those lines.
That is why two homeowners with identical appraisals can owe very different amounts: one may have filed for the homestead exemption and the other may not have. The Comptroller’s property tax exemptions page explains who qualifies and how to apply. There is no fee to file, and the exemption does not expire as long as the home remains the owner’s principal residence.
This point deserves emphasis because the relief laws only help homeowners who have actually claimed the homestead exemption. A bigger exemption is worthless on a property that was never registered as a homestead with the local appraisal district. New homeowners, in particular, sometimes assume the benefit is automatic; it is not. A person who bought a home and made it their primary residence should confirm that the homestead exemption appears on the appraisal notice, and file the one-time application if it does not. Doing so is the prerequisite for receiving any of the school-tax relief the Legislature created.
Why your bill can still rise
Relief from the state does not freeze a homeowner’s bill in place. Three things can push it back up. First, appraised values can climb; a homestead has a 10 percent annual cap on the increase in its taxable value, described on the Comptroller’s property tax system basics page, but values can still rise within that cap. Second, cities and counties set their own rates, and those are not covered by school-rate compression. Third, voters in a district can approve bonds or rate increases that add to the bill.
So a homeowner can see the school-tax line fall because of a bigger exemption and lower compressed rate, while the city or county line rises enough to offset part of the savings. The net change on the bottom line is what counts, and it varies by address.
There is also a question of how long the relief lasts. Rate compression depends on the state continuing to send money to school districts to replace the property-tax revenue it bought down. Lawmakers funded that commitment in recent budgets, but a future Legislature facing a tighter budget could choose to compress less, which would let school rates drift back up. The constitutional homestead exemption amounts approved by voters are more durable, since changing them would require another statewide vote. For now, both pieces are in effect, but a homeowner should treat the rate-compression portion as a policy that has to be renewed rather than a permanent fixture.
How to estimate the effect on your own bill
A homeowner can do a rough estimate in a few steps. Start with the appraisal notice from the local appraisal district, which lists the market value, the capped taxable value, and any exemptions already applied. Subtract the school homestead exemption from the value used for school taxes. Then apply the school district’s compressed rate, plus the separate rates for the city, county, and special districts, to the appropriate values.
Most appraisal districts and county tax assessor-collectors post current rates online, and the Comptroller’s tax rates and levies page aggregates rate data statewide. Homeowners who have not yet filed for the homestead exemption should do so as early as possible, since it is the single largest lever an ordinary household controls. Those who are 65 or older or who have a disability should also check whether the additional exemptions and the school-tax ceiling apply to them.
From $40,000 to $140,000 in two legislative cycles
The 2023 and 2025 relief laws were real and substantial: the school homestead exemption more than tripled over two cycles, from $40,000 to $140,000, and the state spent billions buying down school rates. For a homeowner whose appraised value held roughly steady, the school-tax portion of the bill should be noticeably lower than it would have been under the old rules.
But “lower than it would have been” is not the same as “lower than last year.” Rising appraisals and locally set city and county rates can move in the opposite direction. Read the appraisal notice carefully each year, confirm that every exemption you qualify for is listed, and treat the relief laws as a discount on one large piece of the bill rather than a cap on the whole thing.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
