'We're not done': Abbott calls for property tax overhaul in Report to the People

AUSTIN, Texas - Gov. Greg Abbott said an overhaul of the Texas property tax is on the table in Wednesday's "Report to the People."

The annual report looks back at what the governor feels are the major accomplishments of his administration and the state over the past year, while setting priorities for the future. The report is released instead of a traditional State of the State address.

What they're saying:

"Texas is the land of opportunity," Abbott said. "We believe in hard work and in high expectations. We value our faith, our families, and our freedom. Texas isn’t just another state. It’s our home and heritage. When challenges arise, so do Texans. As we look ahead, we will keep building a stronger, more prosperous Texas for generations to come." 

Abbott touts property tax cuts and vows to add more

What they're saying:

"After delivering a historic $51 billion in property tax relief this biennium, we are not done," Abbott said. "We will overhaul the property tax system and give you the power to stop local governments from hiking your property taxes."

Last year, Abbott signed a $10 billion property tax relief package that had Senate Bill 4, Senate Bill 23, and House Bill 9.

The specific measures include:

• Senate Bill 4: This bill would increase the homestead exemption for school district taxes from $100,000 to $140,000. This is projected to save the average homeowner $484 annually.
• Senate Bill 23: This legislation raises the property tax exemption for Texans over 65 and those with disabilities from $10,000 to $60,000. When combined with the proposed homestead exemption, their total exemption would reach $200,000, resulting in an average annual savings of over $950 for more than 2 million homeowners.
• House Bill 9: This bill targets small businesses by raising the exemption for business personal property to $125,000. The projected average annual savings for business owners is $2,500.

The bills were sent to the voters and passed as constitutional amendments last November.

In February, Abbot laid out a five-point plan to overhaul the property tax system.

The five-point plan is intended to overhaul the state’s property tax system, proposing stricter limits on local government spending, tighter caps on property appraisals and a pathway to eliminate school district property taxes for homeowners.

By the numbers:

Abbott’s five-point plan proposes a sweeping overhaul of the state’s property tax system, including:

1. "Common sense" local spending limits

In the first step, Abbott said imposing "common sense" local spending limits would ensure cities, counties and other taxing entities "live within their means."

Under his proposal, local government spending growth would be limited to population growth plus inflation or 3.5%, whichever is lower. 

Abbott pointed to Harris County, claiming it increased property taxes by nearly 14% over the past two years. 

"What I say we have to do is ensure that every property taxing jurisdiction in the state of Texas must live within spending limits also. Let's apply this to Harris County, Texas. In Harris County, Texas, that entity alone increased your property taxes by almost 14% in just the last two years," said the governor.

2. State-mandated voter approval for tax increases

The next step in the plan would require two-thirds voter approval for all local property tax increases before they could take effect. 

Abbott said no property tax increase should take effect without voter approval.

"No property tax increase should ever be put into place without first being voted on by the voters, and it has to get a two-thirds vote to be able to pass," he said.

Currently, certain property tax measures require supermajority approval and Abbott’s proposal would expand that requirement statewide.

3. Empowering voters to roll back taxes

In addition to the state-mandated voter approval, the governor proposed allowing voters to roll back local property taxes if 15% of registered voters in a jurisdiction sign a petition triggering an election.

Courtesy: Texans for Greg Abbott 2/11/2026

4. Create appraisal predictability, cap appraisal growth

In his fourth step, Abbott also called for changes to the appraisal process, which he said contributes to unpredictable tax bills. His plan would require that properties be appraised once every five years instead of annually. It would lower the cap on annual homestead appraisal growth from 10% to 3% and extend appraisal caps to all properties, including rental and commercial properties.

Currently, Texas law limits homestead appraisal increases to 10% per year. Abbott said reducing that cap would provide greater predictability for homeowners and help keep people, particularly those on fixed incomes, from being priced out of their homes.

5. Eliminate school property tax for homeowners

Lastly, the final step of the proposal would allow voters to decide, through a constitutional amendment, whether to eliminate school district property taxes for homeowners. 

Abbott said the largest portion of most property tax bills goes toward public education and argued the state should assume that responsibility.

"The state should pay for public education, not your homestead," he said, adding that his plan would eliminate the school district portion of homeowners’ property tax bills and have the state fully fund public education.

He said that change alone would cut property tax bills by more than half.

Texans pay 9th highest property tax in nation

U.S. Census Bureau data shows Texas homeowners pay the ninth-highest effective property tax rate in the nation.

Property tax revenue rose nationwide, by more than $96 billion between 2022 and 2024. 

That increase outpaced gains in sales tax during that period, which increased by just over $21 billion, and outpaced gains in corporate income tax revenue during that period, which increased by $5.3 billion.

Property taxes are calculated as a percentage of a home’s assessed value and are a primary source of funding for communities. The study conducted by Construction Coverage analyzed U.S. Census Bureau data to calculate effective property tax rates by dividing the aggregate annual real estate taxes paid by the aggregate value of housing units.

Texas has an effective property tax rate of 1.245% for owner-occupied homes. That is significantly higher than the national effective rate of 0.888%. Property tax rates vary widely by state. Illinois has the highest effective rate at 1.793%, followed by New Jersey at 1.675%. While Southern states generally post lower rates, Texas stands out as an exception, ranking ninth overall.