Rob Hartley

Founder, AppealDesk · March 27, 2026

Texas Property Tax Law Changes 2026: What Homeowners Need to Know

Updated March 2026

The Big Change: Proposition 4 (HJR 2 / SB 2)

Passed in November 2023 during the 88th Legislature's 2nd Special Session, Prop 4 is the most significant Texas property tax reform in decades. All provisions are fully in effect for 2026:

$100,000 School District Homestead Exemption

The school district homestead exemption was raised from $40,000 to $100,000. This is the single largest line item for most Texas homeowners. On a home assessed at the Texas median of $202,600, this exempts nearly half the value from school taxes.

• Before Prop 4: $40,000 exemption
• After Prop 4: $100,000 exemption
• Typical savings: $600-$1,200/year depending on school district rate

Action required: If you already have a homestead exemption on file, the increase is automatic. If you never filed for homestead, you're missing the entire $100,000 exemption.

Over-65 and Disabled Exemption Increase

The combined over-65/disabled school district exemption is now $110,000 ($100,000 general homestead + $10,000 additional). This is on top of the tax ceiling freeze that locks your school tax amount at the level when you turned 65.

New 20% Cap for Non-Homestead Properties

For the first time, Texas now caps annual appraisal increases on non-homestead properties (rental homes, commercial buildings, vacant land) at 20% per year -- but only for properties appraised at $5 million or less. Properties over $5M have no cap.

This is significant for landlords and small investors who previously had no protection against large year-over-year increases.

School Tax Rate Compression

Prop 4 funded an additional round of school M&O (maintenance and operations) tax rate compression through the state's property tax relief fund. This means school districts are required to lower their M&O rates, reducing your bill even if your assessed value stays the same.

The 10% Homestead Appraisal Cap

Texas's 10% annual appraisal cap on homesteads remains in effect for 2026. Proposals to lower it to 5% were filed during the 89th Legislature (HB 43, SB 182, and others), and Governor Abbott expressed support. Whether these passed is a development homeowners should track.

Critical detail: The 10% cap limits appraised value increases, not your tax bill. If local tax rates increase, your bill can still rise by more than 10%. And the cap resets when you buy a new home -- new purchasers start at full market value.

89th Legislature (2025 Session): What to Watch

The 89th Texas Legislature convened in January 2025 with property taxes as a top priority. Key proposals under consideration:

• 5% appraisal cap: Multiple bills to lower the homestead cap from 10% to 5%
• Further homestead exemption increases: Proposals to raise beyond $100,000
• Property tax / franchise tax swap: Using other revenue sources to further reduce school property taxes
• Senior freeze expansion: Extending the over-65 tax ceiling to additional taxing jurisdictions beyond school districts
• ARB reform: Changes to Appraisal Review Board procedures and taxpayer transparency requirements

Check the Texas Comptroller's website for the latest on what was signed into law.

Protest Process for 2026

The protest process itself remains largely unchanged:

• Filing deadline: May 15 (or 30 days from your notice, whichever is later)
• File with: Your county's Appraisal Review Board (ARB)
• Online filing: Most major counties (Harris, Dallas, Tarrant, Travis, Bexar, Collin, Denton) offer online protest filing
• Informal hearing first: You'll typically meet with an appraiser informally before any formal ARB hearing
• Evidence that wins: Comparable sales within 1 mile showing lower values than your assessment

Franchise Tax Threshold

While not a property tax, Prop 4 also raised the franchise tax no-tax-due threshold from $1 million to $2.47 million in total revenue. This eliminated the franchise tax for approximately 67,000 small businesses.

SALT Deduction Impact

The $10,000 SALT cap remains in effect for 2026. The average Texas homeowner pays $3,647 in property taxes. Since Texas has no state income tax, most of your SALT deduction is property taxes. A successful protest that reduces your bill keeps more room under the cap.

2026 Action Checklist for Texas Homeowners

1. Verify your homestead exemption is on file -- the $100,000 exemption is only applied if you've filed
2. Check if your 10% cap is applied correctly -- compare your appraised value to last year's (should not increase more than 10%)
3. If over 65: confirm your $110,000 school exemption and tax ceiling freeze are applied
4. Review your assessment notice when it arrives (typically April)
5. File your protest by May 15 if your assessed value exceeds market value
6. Check the Comptroller's site for any new exemptions from the 89th Legislature