The latest Biennial Property Tax Report from the Texas Comptroller confirms what many Texas homeowners and fiscal watchdogs, like TFR, already suspected: property taxes did, in fact, increase in 2023 by $650 Million despite promises of relief. 

While this news is frustrating, it also sets the stage for extraordinary opportunities to deliver meaningful reform for taxpayers in the upcoming 2025 Legislative Session.

The Legislature allocated nearly $13 billion over two years to reduce school district maintenance and operations (M&O) property taxes. However, these efforts fell short due to excessive local government spending and levy limit loopholes. Yet, with an expected $20 billion state surplus—the result of over-collected taxpayer dollars—the 2025 session presents a chance to rethink Texas’s property tax system entirely and deliver lasting relief.

2023 Data Highlight What Went Wrong

The Legislature’s intent to cut school district property taxes by more than $6 billion in 2023 was undermined by decisions at the local level:

• School District Taxes: Property taxes dropped by just $4.5 billion, far below the expected reduction.
• Cities, Counties, and Special Purpose Districts: These entities collectively increased their property tax levies by $5.15 billion, more than offsetting the school district tax cuts.
• Total Impact: Despite the state’s efforts, total property taxes rose by $650 million in 2023, leaving many Texas property owners with higher bills.

This frustrating outcome underscores a systemic issue: excessive spending by local governments is the root cause of Texas’s property tax crisis.

A System Built to Grow Government

The current property tax system prioritizes government growth over taxpayer relief. Over the past 25 years, total property tax levies in Texas have grown by an average of 5.63% annually, far outpacing inflation and population growth. Local governments have consistently used loopholes in property tax levy limits to raise revenues and fund new spending projects without voter approval.

Additionally, rising local debt burdens taxpayers further. Property tax revenue is increasingly used to pay for debt service rather than essential services, compounding the strain on homeowners. Even the $13 billion allocated by the Legislature for property tax relief in 2023 was insufficient to counteract these spending trends.

Frustration with the Legislature

The Legislature’s efforts in 2023 didn’t go far enough. While they allocated billions for relief, loopholes in levy limits and excessive state and local spending negated much of the benefit. Texans deserve better. 

However, frustration can turn into optimism. The 2025 Legislative Session, beginning on January 14, offers a historic opportunity to fix what’s broken. With a roughly $20 billion surplus, lawmakers have the resources to make bold changes that could transform the property tax system for good.

The Opportunity in 2025

This extraordinary surplus allows the Legislature to address the systemic issues driving property tax increases. Here’s how the Legislature can deliver meaningful reform:

1. Close Loopholes in Levy Limits: Tighten property tax levy limits to ensure local governments cannot increase property taxes with voter approval. This will hold local officials accountable for their spending.
2. Implement Spending Limits: The state should impose a strict spending limit on state and local governments to ensure budgets are sustainable and aligned with taxpayers’ ability to pay.
3. Use the Surplus for Tax Relief: Every dollar of state surplus above the strict spending limit should be used to reduce school district M&O property taxes to zero. These taxes account for the largest portion of property tax bills, and reducing them will provide immediate relief to Texans. Local governments should also use their surpluses to reduce their property tax rates to zero.

Optimism for the Future

While the 2023 results are disappointing, the upcoming session presents an opportunity for bold action. Texans deserve lower property tax bills, not a system that fuels government growth at their expense. 

The Legislature must recognize that excessive spending is the core problem and take decisive steps to address it.

The good news is that Texans are paying attention. The public demands real solutions, and lawmakers have the resources to deliver. By focusing on spending restraint, closing loopholes, and using surplus funds for tax relief, the Legislature can make 2025 the year Texans finally see meaningful, lasting property tax cuts on a path to elimination.

The Path Forward

This isn’t just about cutting taxes—it’s about empowering Texans to own their property and reducing the government’s burden on their lives. By taking bold steps in 2025, the Legislature can ensure that homeowners no longer feel like they’re renting their homes from the government. I’ve spent over a decade advocating for property tax reform and fiscal responsibility, and I remain optimistic about what can be achieved in 2025. Let’s turn frustration into action and maximize this extraordinary opportunity to let people prosper!

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