Texas Property Tax Levies 1998 – 2025

From 1998 to 2025, Texas property tax levies increased by 378%, while combined population growth and inflation rose only about 210%. School district property taxes account for nearly half of this growth, driving up the cost of housing and making Texans perpetual renters of their own homes. Despite repeated promises of reform and the LBB’s claim of $51 billion in property tax relief since 2019, exemptions and temporary measures have failed to slow the trend. The data proves that without bold structural reform to eliminate property taxes, Texans will remain trapped in an unsustainable system.

Property taxes function like a recurring wealth tax. Even after a mortgage is paid off, homeowners must continue sending checks to the government or risk losing their property. Renters are not spared, as landlords pass the costs down, with property taxes accounting for 20 percent or more of monthly rent in many areas. Businesses, too, are hit hard, discouraging investment and job creation. In practice, Texans never truly own their homes. They rent them from the government for life, making property taxes both economically destructive and fundamentally unjust.

The problem isn’t revenue; it’s government spending. At the state level, the budget has grown nearly 40 percent in just two cycles, twice the rate of population growth plus inflation. Locally, spending and debt growth are equally out of control. For example, local government debt per capita in Texas now exceeds $8,600, one of the highest in the nation. Without strong spending limits, even well-intended measures like homestead exemptions or appraisal caps are temporary gimmicks that shift burdens rather than restrain growth.

School district property taxes make up nearly half of all property tax levies in Texas, reaching $41.65 billion in 2025. Since 1998, they have risen by more than 270 percent, remaining the single largest driver of Texans’ skyrocketing bills. Lawmakers have repeatedly promised “school finance reform” or “school choice” but instead delivered billions more to the same system, trading true reform for political deals. The result is that school property taxes remain the dominant factor keeping families trapped in an affordability crisis.

Recent budgets have advertised “historic property tax relief,” with state lawmakers spending an estimated $51 billion in the 2026–27 biennium to maintain and expand relief packages enacted since 2019, including multiple homestead exemption increases and rate compression efforts. Yet total levies still climbed from $66.5 billion in 2019 to $89.4 billion in 2025 — a 34 percent increase despite the spending. The reason is simple: the Legislature continues to address the symptoms of high property taxes while refusing to confront the disease, which is unrestrained government spending. Without structural spending limits, every “relief” dollar is quickly swallowed by rising appraisals and new local levies.

Compounding the problem, homestead exemption increases are little more than a gimmick. Without simultaneous spending cuts, the burden simply shifts from one group of taxpayers to another. Renters, businesses, and non-homestead property owners end up paying more to make up the difference. That is not relief; it is redistribution. True relief comes only from rate compression that benefits every taxpayer equally, ideally driven by surplus revenue that buys the rate down to zero.

An exemption is a fixed dollar amount. Home values are not. Each time the Legislature raises the exemption, rising appraisals and rising local M&O rates begin chipping the savings away the very next tax year. The history table tells the story bluntly: every previous “historic” increase needed another increase within a few sessions to keep up. The 1997 jump to $15,000 lasted 18 years before another bump was politically necessary. The 2015 jump to $25,000 lasted seven years. The 2022 jump to $40,000 lasted one year before being eclipsed by the $100,000 figure. The 2023 jump to $100,000 lasted two years before being raised to $140,000.

The pattern is not slowing. It is accelerating — because the underlying spending growth is accelerating. Every relief cycle gets shorter. Every “permanent” exemption becomes the floor of the next negotiation.

The homestead exemption only benefits owner-occupied primary residences. It does nothing for the roughly 40 percent of Texans who rent. It does nothing for small business owners, farmers and ranchers operating non-homestead land, or the owners of any second property. Worse, when state aid backfills school districts for the homeowner relief, those backfill dollars come from general revenue — funded by sales taxes, severance taxes, and franchise taxes that everyone pays, including renters and businesses. Renters thus pay twice: once through higher rents (as landlords pass property taxes through), and again through the state taxes that fund a homestead exemption they cannot claim.

This is not relief. It is redistribution from the people who can’t vote on a homestead exemption to the people who can.

Article VIII, Section 1 of the Texas Constitution requires that taxation be “equal and uniform.” A homestead exemption is, by design, the opposite — it taxes the same dollar of property value differently based on who owns the property and how they use it. Each round of homestead expansion therefore further entrenches a politically preferred class of taxpayer (the homeowning voter), while leaving everyone else outside the protection. Rate compression, by contrast, lowers the tax for every property class equally and respects the constitutional principle the homestead exemption increasingly violates.

When the state raises the school district homestead exemption, it promises to “hold harmless” school districts — meaning the state writes a check from general revenue to make up for the lost local tax base. This works as long as oil and gas severance taxes, sales taxes, and federal aid keep producing the surpluses Texas has enjoyed in recent years. The moment they don’t, the state faces a cruel choice: raise taxes elsewhere, cut education funding, or break the hold-harmless promise and watch local rates shoot back up. The Houston Chronicle Editorial Board, even in endorsing the 2025 increase, warned that “raising the exemption puts Texas in a potentially precarious financial position.” A reform that depends on permanently elevated surpluses is a reform that is one recession away from collapse.

By contrast, eliminating the property tax through disciplined spending and rate buy-down is structurally durable. A rate of zero cannot be partially backfilled. It is either eliminated or it isn’t.

This is the central California lesson, and the empirical record is now decades long. California’s Proposition 13 (1978) capped appraisal growth at 2 percent per year for as long as the same owner held the property — meaning a homeowner who bought in 1985 pays property taxes on a fraction of what an identical home next door pays if it sold last year. The longer you stay, the bigger the implicit subsidy. The economic name for this is the lock-in effect: families who would otherwise move — for a new job, to downsize after children leave, to upsize when a family grows, to relocate closer to aging parents — choose instead to stay put because moving means losing their tax discount.

The most rigorous study of the phenomenon, Property Tax Limitations and Mobility: The Lock-in Effect of California’s Proposition 13 (NBER Working Paper 11108, Wasi & White, 2005), found that from 1970 to 2000, the average tenure length of California homeowners increased by 1.04 years relative to comparison states, and renter tenure increased by 0.79 years. In the high-cost coastal cities where the implicit subsidy was largest, owner tenure increased by two to three years. African-American households and migrants, the study found, responded more strongly than other groups — a perverse equity outcome for a policy often pitched as helping the vulnerable.

For Texas, this would mean fewer homes coming on the market each year — exactly the opposite of what an affordability crisis driven by tight supply requires.

An appraisal cap does not reduce the total amount of tax a school district or city collects — Texas law explicitly allows taxing units to maintain revenue by raising rates when appraised value falls. So when long-tenured homeowners’ taxable values fall further and further behind market value, the rates levied on everyone else rise to make up the difference. The “everyone else” in that equation is, predominantly, first-time homebuyers, who buy at full market value with no accumulated cap protection — and renters, whose landlords pass the higher rates through.

The lock-in effect compounds this directly. A 35-year-old buying their first home in Austin or Dallas pays property taxes calculated on the full purchase price, while their neighbor who bought the identical house in 2010 pays on a capped value tens of thousands of dollars lower. Same house. Same school. Same fire protection. Wildly different tax bills, with the difference structurally favoring whoever got there first. As the Texas Tribune’s 2023 analysis found, the gap between new and longtime homeowners barely exists under the current 10 percent cap — but tightening the cap to 5 percent or 3 percent would widen that gap sharply, year after year, in California-style fashion.

The Texas A&M Real Estate Research Center put it bluntly in its analysis of a proposed 5 percent cap: such a policy “would work to distort housing purchase decisions by keeping property taxes low for long-term residents” and “threatens to impact the marketability of new homes and retard demand for new development by increasing the burden of purchasing new homes or even moving to another existing home.”

Texans don’t need to look only to California for evidence. The 88th Legislature created a temporary 20 percent circuit-breaker cap on non-homestead property under $5 million in 2023. A Rice University Baker Institute study (September 2025) examined the cap’s first year of operation across five representative Texas counties (Collin, Harris, Midland, Moore, and Smith) and found:

• The cap removed only 0.4 percent of total taxable value — a small share of taxpayers got a small benefit;
• Tax rates rose in every county studied to make up the lost revenue;
• The total property tax levy across the five counties was higher with the cap than it would have been without it;
• Even median homeowners — who don’t qualify for the non-homestead cap — saw their tax bills go up because of the rate increases the cap forced.

As Baker Institute Director John W. Diamond summarized: “While appraisal caps may reduce property taxes for a small share of taxpayers, they result in a tax increase on properties not impacted by the cap if revenues are maintained at the initial level and lead to unequal treatment of similar properties.” Even the business-aligned Texas Taxpayers and Research Association concluded the cap “is not an effective way to reduce property taxes in Texas.”

And separately, TTARA’s earlier analysis of the existing 10 percent cap found that in 2022 alone it shifted roughly $4 billion in property tax burden onto rental property, new home buyers, and businesses. Tightening the cap further would multiply that shift.

The same constitutional concern that applies to homestead exemptions applies in sharper form to appraisal caps. Article VIII, Section 1 of the Texas Constitution requires “equal and uniform” taxation. A homestead exemption taxes the same dollar of value differently based on use; a tighter appraisal cap taxes identical homes differently based on how long the current owner has lived there. Two families on the same block, in functionally identical homes, pay wildly different property tax bills — not because their houses are different, not because their use is different, but because one bought earlier than the other.

The U.S. Supreme Court upheld California’s Proposition 13 in 1992 against an equal-protection challenge, but only by accepting the state’s argument that the policy advanced the legitimate interest of “neighborhood preservation, continuity, and stability.” Whatever one thinks of that justification, it is fundamentally a defense of discouraging mobility — exactly the outcome Texas, in the middle of a housing affordability crisis driven by inadequate supply, can least afford to enshrine.

Property taxes are one of the key drivers of Texas’s housing affordability crisis. Families are spending over half their income just to keep a roof over their heads, while renters see higher costs passed down through escalating levies. Combined with restrictive zoning, minimum lot sizes, and permitting delays, high property taxes make homes unaffordable for many Texans. Eliminating property taxes would remove one of the most regressive barriers to homeownership and restore the ability of families to build and pass down wealth.