Texas legislators keep debating property tax reform. Here's what DFW homeowners need to know.
Current system:
- Texas has no state income tax. Property taxes fund local government, schools, and services.
- Average effective rate in DFW: ~2.0-2.2%. Source: Texas Comptroller.
- On a $400K home: $8,000-8,800/year.
- Texas has the 6th highest property taxes in the US. Source: Tax Foundation.
Recent reforms passed:
- Proposition 4 (2023): Reduced school district tax rates, raised homestead exemption to $100K. Source: Texas Legislature.
- Homestead exemption increase: From $40K to $100K, saving the average homeowner $1,200+/year on school taxes.
- 10% appraisal cap for homesteads — your appraised value can't increase more than 10% per year.
What's still being debated:
- Appraisal cap expansion: Lowering the 10% cap to 5% for homesteads.
- Commercial property reform: Business properties don't have a 10% cap. Some want to add one.
- Revenue caps for cities: Limiting how much cities can increase total property tax revenue year over year.
- State income tax vs property tax swap: Occasionally floated, politically radioactive in Texas.
What it means for DFW:
- Lower property taxes = less local revenue = potential cuts to services or schools
- OR state backfills the difference (current approach with school funding)
- If state funding isn't sustained long-term, school districts face budget pressure
Sources:
- Texas Comptroller: comptroller.texas.gov
- Tax Foundation: taxfoundation.org
- Texas Legislature Online: capitol.texas.gov
- Texas Tribune property tax coverage
Property tax reform is complicated. There are no free lunches.