Changes to Texas Property Tax Laws: What Commercial Property Owners Should Know

July 27, 2023 |

Texas has long been known for its favorable business environment, attracting entrepreneurs and investors from across the nation. Even so, ever-increasing property valuations in recent years — and the costly property tax bills that followed suit — left many property owners paying more than their fair share. Recent changes to Texas property tax laws aim to right the situation.

Here, Lane’s commercial property tax pros take a look at the updated Texas property tax laws, which voters will have their say in during the November election. Let’s delve into the proposed changes and how those updates will impact commercial property owners and their business if passed.

A High-Level Look at the Most Recent Texas Property Tax Law Changes
There are three key components to Texas’ property tax law legislation — two senate bills (SB) and one house joint resolution (HJR).

  • SB2 (Bettencourt): Lays out details surrounding the proposed $18 billion tax cut that lowers school property tax rates for all Texas commercial and residential properties. It includes the creation of 20% circuit breaker pilot program, changes to appraisal review board (ARB) appointments and details not only exemptions related to residential homesteads, but catch-up provisions for those with exemptions related to disabilities or being age 65 or older.
  • SB3 (Bettencourt/Parker): A franchise tax relief bill for small business owners that raises the amount of revenue exempted from the franchise tax to $2.47 million and eliminates requirements for zero-tax forms.
  • HJR 2 (Meyer/Metcalf): The constitutional amendment linked to SB2 (Bettencourt), HJR 2 sets a December 2026 expiration date for the circuit breaker pilot program and exempts the $18 billion in appropriations from the constitutional spending limit. HJR 2 is required in order for the tax cuts to receive official authorization.

What Commercial Property Owners Should Know About the Recent Changes
Property tax law is a complex topic even for those of us who deal in it each day. So, if you find yourself more than a bit confused by the recent changes, rest assured you aren’t alone. Here are a few key takeaways to know about where things stand — and how the laws will impact you.

  • SB2 and SB3 Have Not Yet Been Signed into Law: Although approved by both the Texas House and Senate, it’s now up to the voters to make things official. In-person early voting goes from October 23 to November 3 in Texas, while election day is November 7.
  • The Circuit Breaker Program Will Keep Valuations in Check for Some — But Not All: This program would cap appraisal value increases to 20% for non-homesteaded properties valued at less than $5 million. The 20% cap does not apply to those with properties valued above the $5 million mark. As such, annual property tax protest efforts will be more important than ever.
  • Some 67,000 Texas Businesses Will No Longer Pay a Franchise Tax: SB3 more than doubles a franchise’s “no-tax-due threshold” from $1 million to $2.47 million, meaning nearly 70,000 businesses will no longer have to pay. At the same time, it eliminates the no-tax-due report many businesses must currently file, but which is largely seen as an annoyance.
  • School Property Tax Rates Will Decrease by 10.7 Cents Per $100: This is a decrease across the board, for both commercial property owners and homeowners. The Texas Legislature plans to send nearly $12.6 billion to school districts across Texas to allow for the cuts.

What Comes Next for Commercial Property Owners
Remember, while these changes have passed both the House and Senate — and therefore won’t change from now until the November election — they aren’t yet law. For now, the best thing you can do is to educate yourself on how the potential changes could impact your business and bottom line. Here are some ways we suggest keeping up on the latest.

  • Keep in contact with the property tax firm that handles your annual protest to understand the unique implications the changes will present for you. At Lane, for instance, we’re keeping up with the latest headlines, deciphering the legalese and passing insights on to you to ensure you’re as informed as possible, come November elections and future tax seasons. We promise to provide updates via email, social media posts and the like.
  • Do your own independent research. Pay attention to news reports and online articles detailing the full scope of the potential changes, and the impacts they could have on commercial property owners like you. The Texas Comptroller’s office, your local county appraisal district (CAD) and the news outlets you turn to each day can all offer insights. Read up and approach election season informed.
  • Vote! Remember, every vote matters. However you feel about the pending changes, it’s important to make your thoughts known and your voice heard. Make it a point to cast your ballot either during early voting or on Election Day.

The details surrounding Texas property tax laws can be confusing, but rest assured Lane is on your side and here to help. Feel free to reach out to us at any time with questions or concerns related to the legislation — or to better understand how it might impact you. We’re here to inform, and ready to do everything we can to unburden your business.

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