Gov. Greg Abbott announced his reelection campaign in November, promising to lower property taxes. His plan covers three areas which The Texas Tribune is breaking down over a series of articles. This is Part Three. Read Part One here and Part Two here.
FORT WORTH — Gov. Greg Abbott wants to put a tighter lid on how fast property values can rise in a bid to deliver property tax relief to homeowners and businesses — but tax policy experts across the political spectrum warn the proposal wouldn’t address the root causes of higher tax bills and would backfire with severe consequences.
A property’s value is a key part of the equation that forms a property owner’s tax bill. That bill is determined by multiplying the property value by the tax rate set by school districts, cities, counties and other taxing jurisdictions.
Texas property owners have seen steep jumps in their appraisals since the start of the decade as the state’s economy boomed, and have complained that those higher property values are driving their tax bills. Homeowners saw persistent jumps in their home values as fierce competition for homes put pressure on Texas’ limited housing stock and drove up prices. Those increases have since cooled, but remain a source of angst for property owners.
Right now, the state limits how much a homeowner’s primary residence’s taxable value can rise each year to 10%. The state enacted that limit in the 1990s to help prevent homeowners in hot housing markets from seeing huge shocks on their tax bill.
Abbott wants to lower that to 3% and extend that cap to owners of all kinds of properties like grocery stores, restaurants and apartment buildings, with the aim of giving property owners more predictability when it comes to their tax bills.
“I know so many people that when they get their appraisal, their hand is quivering with that envelope in their hand because they’re afraid to see how much their property taxes are going up,” Abbott said at an event last week in Fort Worth, where he championed his proposals.
Abbott’s appraisal proposal is a key part of the governor’s property tax-cut platform that’s front and center in his 2026 reelection bid, which includes provisions to end school property taxes for homeowners and make it harder for local governments to raise property taxes.
Tax experts of all political perspectives interviewed by The Texas Tribune were most skeptical of this portion of the plan. The Abbott campaign did not directly respond to concerns cited by those experts about the proposal. In a statement, Abbott’s press secretary Eduardo Leal reasserted the entire package would save taxpayers.
“Only in Austin would special interests claim the answer to rising property taxes is… more taxes,” Leal said. “Texas just invested $51 billion in local property tax cuts — without raising taxes or cutting essential services. This is a simple choice: stand with taxpayers or stand in the way. Governor Abbott believes that giving voters more control of their property taxes is essential to making Texas more affordable. He will take his plan to voters to secure a mandate for reining in local spending, overhauling the broken appraisal system, and finally giving Texans control over their property taxes.”
Have a question about property taxes? Have your property taxes grown or shrunk in recent years? Are you having trouble affording your property taxes? Email Joshua at joshua.fechter@texastribune.org.
Good politics, bad policy
Tax policy experts on the right and left have long maintained that tight appraisal caps, though they may be good politics, don’t work and have terrible consequences.
Higher property values don’t necessarily mean higher tax bills, tax experts and property appraisers have said, and local taxing entities carry the responsibility of setting tax rates so that tax bills don’t rise exorbitantly even if a property’s value does. In Texas, tax-cut proponents have instead pressed lawmakers to focus on efforts to drive down tax rates and revenue, seen as more surefire ways to slow tax bills.
Abbott’s idea, tax policy experts said, strongly resembles California’s Proposition 13, a 1970s ballot initiative that aimed to reduce homeowners’ taxes after several years of rapidly rising home values by putting tight limits on property value growth and tax rates.
What followed: vast inequities between taxpayers, higher housing costs and tax benefits flowing disproportionately to wealthy homeowners — results that have played out in other places like New York City that have also enacted stricter caps.
“Bringing California-style property tax reform to Texas is just not sound policy,” said Manish Bhatt, a senior tax policy analyst at the conservative Tax Foundation.
The appraisal cap creates a “lock-in” effect in which long-time homeowners who might’ve sold their homes won’t because they’ll lose the tax benefit. That means fewer homes on the market and higher home prices as a result of that scarcity.
“Homeowners are less likely to trade up to a bigger home when they’re purchasing power or family size increases,” Bhatt said. “That means that there’s less supply for newer homeowners and younger families.”
That sentiment is shared on the other side of the political spectrum.
“For a state like Texas that loves to pitch itself as being pro-family and good for families, this is a pretty anti-family policy,” said Neva Butkus, senior analyst at the left-leaning Institute on Taxation and Economic Policy. “That’s going to hinder the ability for young families who are getting married and want to buy their first home and enjoy the perks of homeownership and build some equity and raise their kids in a property that they own. The people that are going to stand to benefit the most are older folks who have owned their homes for a long time, who have a lot of wealth already built up.”
A tighter cap would also make the tax system more unfair, experts said. Under a tighter cap, longtime property owners wind up paying much less in property taxes than newer ones, putting first-time homebuyers and new business owners at a disadvantage. Such a disparity largely doesn’t exist under the state’s current tax system, according to an analysis by the Lincoln Institute of Land Policy.
That disparity does exist in California, said Adam Langley, associate director of tax policy at the Lincoln Institute of Land Policy.
“It’s very common to see identical, side-by-side homes with one person paying taxes that are more than five times higher than their neighbors,” Langley said.
For all of that, local governments may simply set tax rates where they need to in order to collect however much revenue they need to make up for funds lost to the cap. That scenario played out in Cook County, Illinois, where taxpayers eventually wound up paying higher tax bills than they would have without a strict appraisal cap, researchers found.
That dynamic is beginning to play out in Texas. Texas House lawmakers pushed a nearly identical appraisal cap proposal to Abbott’s during the 2023 legislative session. That proposal met stiff resistance from Lt. Gov. Dan Patrick and tax-cut proponents in the Senate. Patrick reiterated his opposition to a tighter appraisal cap Tuesday when he released his own tax cut proposal. The 2023 legislation also garnered opposition from groups representing businesses the proposal was intended to benefit. The concern was that older businesses would benefit at the expense of younger ones.
Lawmakers eventually settled on a compromise, creating a 20% appraisal cap for business properties worth $5 million or less.
There are signs that the policy drove up tax rates. A study commissioned by the Texas Taxpayers and Research Association and Rice University’s Baker Institute for Public Policy found that Collin, Harris, Midland, Moore and Smith counties adopted higher tax rates in 2024 than they otherwise might have to make up for value lost to the cap. Taxes on properties that benefit from the cap fell by $12.8 million while taxes on properties that don’t rose by $14.2 million, those researchers found.
Abbott also wants appraisal districts to appraise properties once every five years rather than every year as they are now. That could lead to homeowners paying taxes on a higher value than they might have on an annual appraisal cycle.
There are other ways to address worries brought on by rising appraisals that don’t carry the same nasty consequences, experts said. Among those suggestions: a “circuit breaker” program that basically caps property tax bills when they exceed a certain percentage of a homeowner’s income. About 30 states and the District of Columbia have programs known as “circuit breakers” that give homeowners a credit or rebate when that happens, which particularly helps lower- and moderate-income households.
Texas lawmakers have occasionally floated and abandoned such an idea, noting the projected cost of administering that kind of program. Texas doesn’t have an income tax, so it doesn’t have a way to verify someone’s income. But states without an income tax, like Washington and New Hampshire, have such programs. Standing up a “circuit breaker” would likely cost less than eliminating school property taxes for homeowners, Butkus said.
Abbott’s plans leave out direct relief for people who rent
Absent from Abbott’s platform is any direct tax relief for the state’s 4.3 million households who rent their homes — in keeping with years of GOP tax-cut policy.
Abbott has said Texas tenants would benefit from his proposed appraisal cap, which would apply to owners of rental properties. Separately, tax-cut proponents have often argued that renters benefit from the billions of dollars the state sends to school districts every year to lower their tax rates.
Other states have programs that provide direct relief to rental households. Renters, too, are eligible for “circuit breaker” programs in the places that have them, Butkus said.
Abbott’s platform doesn’t tackle other aspects of housing affordability, like the rising cost of homeowners’ insurance. What relief homeowners have seen on the property tax side has been eaten up by rising homeowners’ insurance costs, among other homeownership expenses, according to the U.S. Census Bureau. Lawmakers this year largely sidestepped ideas to tame insurance bills.
The platform also doesn’t address how to tame the state’s considerable housing shortage, a key driver of the state’s higher home prices and rents. Abbott signed new bipartisan laws this year to cut red tape and allow more homes to be built to ease the shortage, laws lauded by housing advocates and Abbott has spotlighted on the campaign trail. But he hasn’t said if he thinks state lawmakers need to pursue further changes in the future.
Abbott will need state legislators to sign on to his tax-cut agenda for any of it to become law, and some have already done so. But he’ll likely face resistance in enacting some parts of his platform from Patrick, who leads the Texas Senate. Patrick is deeply resistant to key parts of Abbott’s agenda, like the stricter appraisal cap proposal.
Disclosure: Rice University and Texas Taxpayers and Research Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
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