Landgraf Keeps Promise to Provide Texas-Size Property Tax Relief

AUSTIN — Republican State Representative Brooks Landgraf’s co-authored legislation to provide $12.7 billion of property tax relief for Texans passed out of the Texas House of Representatives Thursday. The legislative package includes House Joint Resolution 2, Senate Bill 2, and Senate Bill 3. SB 2 and SB 3 must now be signed by Governor Abbott to go into law while HJR 2, which provides the constitutional authority necessary to enact several provisions of SB 2, must be approved by Texas voters in November.

“Everything is bigger in Texas, including our tax cuts,” Landgraf said. “I hope this starts a trend that the state continues and local governments follow. We took the largest budget surplus in Texas history and turned it into the largest tax cut in Texas history, not only cutting property taxes, but the franchise tax as well. As a strong believer in and fighter for limited government, I’m proud we’re keeping our promise and putting money back in the pockets of hard-working Texas taxpayers. The benefits of the legislation passed today will be far-reaching, positively impacting Texas families and small businesses alike.”

Senate Bill 3 increases the “no tax due” threshold for franchise tax purposes to $2.47 million, ensuring businesses operating in Texas with revenue under this figure in a given tax year do not owe any franchise tax or have to file a franchise tax report. The current statutory “no tax due” threshold is $1 million.

“While I am certainly proud of the significant reform to the franchise tax made by SB 3, I would have liked to see a larger cut and a plan to phase out and repeal the tax,” Landgraf continued. “The franchise tax is bad policy that hurts Texas businesses and our economy because it is levied irrespective of whether businesses make a profit. That is why I filed HB 2213 earlier this year to repeal the franchise tax altogether. Even though I’m not totally satisfied, cutting the franchise tax by doubling the no tax due threshold is a huge step in the right direction and a very good thing for Texas.”

Senate Bill 2 increases the homestead exemption from $40,000 to $100,000 and taps surplus revenue to provide $12.7 billion in property tax relief over the next 2 years by reducing school district maintenance and operations (M&O) tax rates by 10.7 cents per $100 of taxable value to “buy down” school district M&O rates. Additionally, SB 2 creates a 20% appraisal cap applicable for tax years 2024, 2025, and 2026 for non-homestead properties with an appraised value of $5 million or less. Importantly, SB 2 also increases the number of directors on an appraisal district’s board of directors from five to nine, three of which now have to be elected by voters in larger counties, including Ector County.

“SB 2 and HJR 2 provide immediate relief and lasting reform. We’re not just using surplus revenue to buy down property taxes for the next two years, we’re seeking to permanently amend the constitution to increase the homestead exemption by 150%! Not only that, but the changes made to appraisal boards will add much needed transparency and accountability. Appraisers have a major role in determining how much Texans have to pay in property taxes, and anyone with that amount of power should have to be elected by the people. I’m proud of these tax cuts, but I will continue to work to provide even more property tax relief moving forward,” Landgraf concluded.

Landgraf and the other members of the Texas legislature convened at the Texas Capitol building on June 27 for a special legislative session called by Governor Abbott. Following the passage of HJR 2, SB 2 and SB 3, the Texas House of Representatives and Texas Senate adjourned to end the special session and return home to their districts. Special sessions of the Texas legislature can only be called by the governor and can last no longer than 30 days. Earlier this year, members of the Texas House and Senate met for a 140-day regular session to vote on legislation and pass a balanced state budget.