Texas Considers Options for Reducing Property Taxes

The Texas legislature is considering two pieces of legislation (Senate Bill 2 and Senate Joint Resolution 76) which are aimed at reducing local property tax burdens. SB 2 would cap property tax levy increases at 2.5 percent, while SJR 76 aims to mitigate property taxes by shifting part of the burden to sales taxes instead. Leaders are likely considering this tax swap in addition to the cap as a strategy to address voters’ complaints about property taxes. We can break down property tax limitations into three main categories: assessment limits, rate limits, and levy limits. SB 2 is a levy limit, which means it limits how much revenue the school district can collect to an annual growth factor of 2.5 percent (down from a current cap of 8 percent). If a district wishes to impose property taxes at a rate which would bring in collections more than 2.5 percent higher than the previous year’s collections, the decision automatically passes to the public through a tax…

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