What Texas’ Proposed $140K Homestead Exemption Could Mean for Houston Real Estate

Property‑tax season just got a jolt of good news: House and Senate negotiators have agreed on a package that would lift the statewide homestead exemption from $100,000 to $140,000 (and to $200,000 for seniors and homeowners with disabilities). The plan still needs final votes—then a statewide referendum in November 2025—but momentum is strong. If it passes, most Houstonians could see relief on their 2025 tax bills.

Quick‑Glance Details

➤ General Homestead Exemption
  • Current: $100 k
  • Proposed: $140 k
  • Applies to all owner‑occupiers

➤ Senior/Disabled Homestead
  • Current: $110 k ($100 k + $10 k)
  • Proposed: $200 k ($140 k + $60 k)
  • Applies to homeowners 65+ & those with disabilities

➤ Business Personal‑Property Exemption
  • Current: $2,500
  • Proposed: $125,000
  • Applies to small businesses

How Much Could You Save?

• Example: Median Houston home price (April 2025) sits at $335,000. 

• Subtract the proposed $140 k exemption → taxable school value ≈ $195 k.

• Using a representative school M&O rate of 0.98%, the annual school tax drops roughly $392 compared with today’s $100 k exemption. (Your total rate may be higher once county, city, or MUD taxes are added, so real‑world savings can land between $360 and $750.)

Why Buyers Should Care

1. Lower Monthly Out‑of‑Pocket: Smaller taxes mean lower escrow payments, which can nudge more would‑be buyers off the fence—especially with mortgage rates still hovering near 7%. 

2. Bigger Affordability Window: The relief bumps purchasing power by ~$10–15k in loan terms, partially offsetting rate pressure.

3. Earlier Break‑Even on New Construction: Builders often roll the first‑year tax estimate into closing costs; a higher exemption accelerates the point when new owners “catch up.”

Advice for Current Homeowners

• File (or update) your homestead exemption now if you purchased a primary residence in 2024–25; the upgrade will auto‑apply once enacted.

• Mark your calendar: You still need to protest your 2025 appraisal by May 31 even if the exemption rises; market values keep climbing.

• If you’re 65 + / disabled, be sure both the standard and the additional exemptions are on file to capture the full $200 k benefit.

Sellers: A Fresh Marketing Talking Point

A bigger exemption is a strong headline for your listing description: “Save on school taxes thanks to Texas’ new $140 k homestead break!” Expect additional buyer demand this summer as word spreads—particularly for homes under $400 k, where proportionate savings feel largest.

Investors & Landlords

While homestead breaks don’t cover rental properties, the business‑property exemption bump (to $125 k) and a potential uptick in owner demand affect the whole market:

• SFR Landlords: Be ready for stiffer competition from would‑be homeowners in the $250–$350 k bracket.

• Small Developers/Flippers: Cheaper inventory & office equipment tax adds a few hundred dollars per door to net profit.

• Watch NE Houston: Pharmaceutical giant Eli Lilly just signaled a $5.9 b biomanufacturing facility at Generation Park, projected to deliver 600 permanent jobs and 2,000 construction roles through 2030—prime rent‑growth fuel for Summerwood, Lake Houston, Humble, and Atascocita. 

Timeline & Next Steps

1. Late May 2025: Bills head to full House & Senate for final vote.

2. Summer 2025: Governor signature expected.

3. November 4, 2025: Constitutional amendment referendum.

4. January 2026 tax bills (retroactive to 2025 values): First year of savings hits mailboxes if voters approve.

Bottom Line

Texas is on the cusp of its largest homestead‑exemption leap ever. For Houston‑area homeowners, that’s real cash back—and for house‑hunters, it’s a nudge to get under contract before prices adjust. Layer in marquee job announcements like Eli Lilly’s and the Bayou City’s long‑term housing story looks even stronger.

🎯 Thinking about buying, selling, or investing this summer? Let’s map out a game plan tailored to your budget, neighborhood wish list, and tax outlook. Call/text or reply below—I’m here to help!