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Texas property tax law has undergone significant changes in recent times, and more changes are expected to take effect in 2022. Property taxes are a critical source of revenue for the state and local governments, and property owners need to keep abreast of the changes in the law, which may impact their tax obligations. This article highlights the upcoming changes in Texas property tax law, their potential impact on property owners, and what you need to know to comply with the new regulations.
Background of Texas Property Tax Law
In Texas, property taxes are a primary source of revenue for local governments, including school districts, counties, and cities. Property values are assessed by county appraisal districts, and tax rates are set by local governing bodies. Property owners are required to pay taxes based on the assessed value of their property multiplied by the applicable tax rate. The tax bill is usually paid in installments twice a year, with the first installment due on January 31st and the second installment due on July 31st.
The state of Texas has one of the highest property tax rates in the country, with an average effective rate of 1.69%. This rate is higher than the national average of 1.07%. However, Texas does not have a state income tax, which partly offsets the high property tax rate.
Changes Coming to Texas Property Tax Law in 2022
1. Increase in Homestead Exemption
One of the significant changes coming to Texas property tax law in 2022 is the increase in the homestead exemption. The homestead exemption is a reduction in the taxable value of a homeowner’s primary residence. The current homestead exemption in Texas is $25,000, but this will increase to $30,000 in 2022. This means that homeowners will pay property taxes on a lower taxable value, resulting in a lower tax bill.
2. Changes in Property Tax Assessment Process
The Texas Legislature has also passed a bill that will reform the property tax assessment process in the state. The bill requires the appraisal districts to provide more information to property owners about their property values and the appeals process. It also establishes a new advisory board to oversee the appraisal process and ensure that property valuations are accurate and consistent.
3. Changes in Tax Rates
Local governing bodies in Texas have the authority to set tax rates, subject to certain limitations. In 2022, some cities and counties may increase their tax rates to offset the revenue lost due to the increase in the homestead exemption. Property owners should be aware of any changes in tax rates in their locality and budget accordingly.
4. Expansion of Property Tax Exemptions
The Texas Legislature has also expanded some property tax exemptions in 2022. The exemptions include:
- A new exemption for disabled veterans who have a 100% service-connected disability rating
- Exemption for property used by certain charitable organizations
- Exemption for property used by certain small businesses
5. Limits on Property Tax Increases
The Texas Legislature has passed a bill that limits the amount by which property taxes can increase year over year without voter approval. The bill limits the increase to 3.5% for most taxing units and 2.5% for school districts. This means that local governing bodies will need to seek voter approval if they want to increase property taxes beyond the limit.
Impact of the Changes on Property Owners
The changes coming to Texas property tax law in 2022 will have varying impacts on property owners depending on their circumstances. Homeowners will benefit from the increase in the homestead exemption, which will lower their property tax bill. However, some cities and counties may increase their tax rates to offset the revenue lost due to the exemption increase. Property owners should be aware of any changes in tax rates in their locality and budget accordingly.
The changes in the property tax assessment process and the establishment of an advisory board will provide more transparency and accountability in the appraisal process. Property owners will have access to more information about their property values and the appeals process, which will enable them to challenge their assessments if they believe they are inaccurate or unfair.
The expansion of property tax exemptions will benefit disabled veterans, charitable organizations, and small businesses. These organizations will pay lower property taxes, which will enable them to invest more in their operations or programs.
Conclusion
The changes coming to Texas property tax law in 2022 will have a significant impact on property owners in the state. Homeowners will benefit from the increase in the homestead exemption, but some cities and counties may increase their tax rates to offset the revenue lost due to the exemption increase. Property owners should be aware of any changes in tax rates in their locality and budget accordingly. The changes in the property tax assessment process and the establishment of an advisory board will provide more transparency and accountability in the appraisal process. Property owners will have access to more information about their property values and the appeals process, which will enable them to challenge their assessments if they believe they are inaccurate or unfair.
People Also Asking
What is the homestead exemption in Texas?
The homestead exemption is a reduction in the taxable value of a homeowner’s primary residence. In Texas, the current homestead exemption is $25,000, but it will increase to $30,000 in 2022.
What is the property tax rate in Texas?
The average effective property tax rate in Texas is 1.69%, which is higher than the national average of 1.07%.
What is the limit on property tax increases in Texas?
The Texas Legislature has passed a bill that limits the amount by which property taxes can increase year over year without voter approval. The limit is 3.5% for most taxing units and 2.5% for school districts.
Who sets property tax rates in Texas?
Local governing bodies in Texas, including school districts, counties, and cities, have the authority to set property tax rates, subject to certain limitations.
