According to the Legislative Budget Board (LBB), HB 2508 is not anticipated to have a significant fiscal impact on the state budget. While the bill would exempt from ad valorem taxation the full appraised value of the residence homestead of the surviving spouse of a qualifying veteran, the overall cost to the state would be minor. This is primarily because the number of surviving spouses eligible under the PACT Act is relatively small in Texas, estimated at around 3,000 individuals. Although granting these exemptions would decrease local taxable values, any associated increase in state funding obligations through the school finance formulas is expected to be minimal.

At the local level, the bill would reduce property tax revenue for local governments (such as school districts, cities, counties, and special districts) due to the reduced taxable property base. However, under current law (Section 26.04 of the Texas Tax Code), local governments could adjust their "no-new-revenue" and "voter-approval" tax rates upward to compensate for the reduction in taxable value. Therefore, the actual impact on local revenues would depend on whether local governments choose to adopt higher tax rates to offset the exemption losses.

Importantly, the fiscal impact is contingent upon the passage of a related constitutional amendment (HJR 133), without which the tax exemption could not be implemented.

HB 2508 addresses an important gap in Texas law by extending property tax relief to surviving spouses of veterans who died from a "qualifying condition or disease" presumed to be service-connected under the federal PACT Act of 2022, regardless of the veteran’s official disability rating at the time of death. Currently, only surviving spouses of 100% disabled veterans are entitled to a full residence homestead exemption. This bill fairly recognizes the sacrifice of veterans whose service-connected illnesses may not have been fully rated before their passing, ensuring that their surviving families receive meaningful support.

The bill reinforces key liberty principles, including Individual Liberty, Private Property Rights, and Limited Government, by protecting vulnerable surviving spouses from undue financial burden and by narrowly tailoring the relief to a clearly defined and deserving group. It is aligned with Texas's ongoing legislative efforts to honor veterans and their families without creating broad or indefinite tax carveouts. Fiscal analyses indicate that while there will be a modest reduction in the local tax base, the overall impact on state finances is not expected to be significant.

While it is always important to be mindful of the long-term effects of creating new exemptions, which over time can erode the overall property tax base, HB 2508 is a limited, focused measure addressing a highly specific and justified need. On balance, the targeted nature of the exemption and the population, and as such, Texas Policy Research recommends that lawmakers vote YES on HB 2508.

• Individual Liberty: The bill supports individual liberty by protecting the surviving spouse’s ability to remain securely in their home without facing the burden of property taxation after the death of a veteran spouse. It acknowledges the spouse's ongoing right to stability and property ownership, respecting the sacrifices made by military families. By providing tax relief specifically tied to a service-related loss, the state appropriately recognizes individual dignity and self-sufficiency, rather than requiring surviving spouses to rely on other forms of assistance.
• Personal Responsibility: The bill affirms the state’s responsibility to fairly recognize those who have borne the burden of national defense. By narrowly tailoring the exemption to specific, verifiable circumstances (deaths linked to PACT Act conditions), it rewards the personal sacrifices made by veterans and their families without opening the door to broad entitlement expansions. It also upholds a social contract that suggests that service to the country should be met with specific, earned benefits rather than generalized government dependency.
• Free Enterprise: The bill has a neutral effect on free enterprise. It does not interfere with market operations, private business activity, or economic competition. However, by helping surviving spouses retain ownership of their homes, it may indirectly contribute to greater economic stability and self-reliance, supporting an environment where individuals can fully participate in the market economy without undue disruption due to service-connected losses.
• Private Property Rights: This bill strongly enhances private property rights. It protects a class of property owners (surviving spouses of qualifying veterans) from being taxed out of their homes due to circumstances beyond their control. The exemption ensures that families retain ownership of their homes without facing forced relocation, tax liens, or sales due to property tax burdens following the loss of a veteran family member.
• Limited Government: The bill generally aligns with the principle of limited government. It creates a narrowly crafted, justified exemption rather than a broad new entitlement program or administrative bureaucracy. However, it slightly narrows the property tax base, which over time could incrementally increase pressure for higher tax rates on other property owners if similar exemptions continue to expand. Still, the focused nature of the relief, linked to specific federal criteria (the PACT Act) and limited to surviving spouses, keeps government intervention minimal and appropriately targeted.

• HJR 133 (Enabling for)