Texas property taxes are among the highest in the nation, largely because the state does not have an income tax. Legislation like Proposition 4 has aimed to reduce some of the tax burden for Texas residents, including seniors over age 65.
Learn more about the legislation and additional tax savings that seniors can realize.
What is the Over 65 Property Tax Exemption?
With the over 65 exemption, the ISD (school districts) tax ceiling is established the year that you turn 65. This is commonly referred to as the over 65 property tax “freeze”. This means that as long as you do not make significant improvements to your property, the maximum amount of property tax you pay towards the ISD won’t increase, even if the market value of your property increases.
Texas Property Tax Code Section 11.13(c) also requires school districts to provide an additional $10,000 residence homestead exemption to seniors. This is in addition to the $100,000 homestead exemption that homeowners can receive.
What is Texas Proposition 4?
Proposition 4 is a property tax relief package passed in 2023 that increased the state’s homestead exemption from $40,000 to $100,000. This results in an additional $60,000 value reduction benefit. The homestead exemption is $110,000 for Texas homeowners 65 and older.
It also provided additional tax cuts through compression. This means that school districts will receive additional funding so they could lower their tax rates.
The amendment is designed to buy down the ISD tax rates by 10.7 cents for every $100 of appraised value in 2023. This reduction will save the average Texas homeowner up to $700.
How Texas Proposition 4 Affects Your Over 65 Exemption
The new homestead exemption amount and lower ISD tax rates means seniors will see reductions on their 2023 property tax bills. The tax ceiling will be recalculated to reflect these changes, and the tax ceiling will freeze at the lower amount.
Potential Tax Savings with Prop 4
As an example, let’s assume a Dallas ISD homeowner, with an over 65 exemption, has a current ISD tax ceiling amount of $4,200.
Combining the $100,000 homestead exemption increase, the reduction to the ISD tax rate, and the additional $15,000 homestead exemption increase that was omitted in 2022, this homeowner would receive an estimated additional tax savings of $786 in 2023. Their new ceiling would be approximately $3,414.
Save on Property Taxes with NTPTS
Proposition 4 and property tax exemptions have reduced the property tax burden for many Texas homeowners, but additional savings can be realized through filing a property tax protest.
A property tax protest allows homeowners to appeal the market value of their home. Should they win their appeal, it reduces the value that is used to calculate property taxes, thus providing additional savings.
Note that homeowners who are 65 and older residing in Collin County are not eligible for further reductions due to tax exemptions that the county provides.
In 2023, NTPTS consultants earned clients an average value reduction of $73,608. Visit our Property Finder tool to enroll in our property tax reduction services.