Texas Property Tax Cuts Leave Most Older Homeowners Paying No School Taxes, Raising Questions of Fairness

Texas lawmakers' push to lower property taxes has produced a clear set of winners: older homeowners. Following additional cuts passed by the Legislature last year, about 60% of Texas homeowners age 65 and up no longer pay school property taxes, the largest part of a typical bill, according to an analysis by the office of state Sen. Paul Bettencourt. Nearly 2.4 million Texans in total now owe nothing in school property taxes.

Jane Lindsley, a 72-year-old retired bookkeeper in an unincorporated part of Hays County, is one of them. Her school tax bill fell to $0 last fall, cutting her overall property tax bill by more than 40%. "I was ecstatic," she said, noting that it was the only expense in her life that was going down. Even so, she still paid more than $1,000 in other property taxes on her $546,000 home last year.

The change stems from a higher homestead exemption on school district taxes, raised to $140,000 last year, combined with an increase in the senior exemption, which also covers homeowners with qualifying disabilities. Together, homeowners 65 and older can shield $200,000 of their home's value from taxation. Bettencourt's office says the average school tax bill for general homesteads dropped 13.6% to $896, while for seniors it fell about 33% to $380.

Republicans appear ready to go further. Lt. Gov. Dan Patrick has said he wants to extend the senior exemption to people 55 and older while raising the exemption for all homeowners, and Gov. Greg Abbott has proposed eliminating school property taxes for all homeowners. Lawmakers committed $51 billion last year to school tax relief, an amount they plan to spend every two years, and budget watchers have warned the approach may be unsustainable if the economy slows.

Critics say the current design is unfair to younger Texans. Derrick Wilson, chairman of the Texas Young Republican Federation, said it seems "foundationally unfair" to give relief to an older generation that voted for bonds the young still have to pay for. Experts on both sides of the aisle describe the arrangement as a wealth transfer, since the surpluses funding the cuts come from other taxes paid by everyone, including working-age adults. Janelle Fritts of the Tax Foundation said many younger people may need relief more than retirees with substantial savings.

Defenders point to genuine financial strain among older Texans. Many live on fixed incomes, and more than half fall below the Elder Index, a measure of the income needed to cover basic expenses. Caitlin Covey of the University of Massachusetts Boston's Gerontology Institute noted that owning a home does not mean having the cash flow to absorb rising costs. Lindsley, who brings in about $4,400 monthly, has seen her homeowners insurance premium more than double and her grocery and health care costs climb.

The tax breaks could also affect the housing market. Research shows that homeowners who receive larger tax cuts are less likely to sell, which reduces the supply of homes and can push prices up for would-be buyers. Experts also warn that renters and commercial property owners may increasingly shoulder the burden. Bettencourt disputes that view, arguing that everyone pays property taxes indirectly through rent and the price of goods.

Texas' senior population is projected to nearly double, from about 3.9 million in 2020 to 7.5 million in 2050, and the comptroller's office says the cost of breaks for older homeowners will grow faster than those for all homeowners. Policy experts suggest alternatives such as a "circuit breaker" that caps a property tax bill at a share of income, and advocates want more housing options, including accessory dwelling units and duplexes, so seniors can downsize within their communities. Lindsley says she may sell within five years but remains attached to her home.