Homestead and property-tax relief in Texas: the $140,000 exemption, the 10% cap, and the over-65 ceiling

A Texas homeowner who lives in the house as a principal residence and files Form 50-114 with the county appraisal district gets three things. The first is the school district homestead exemption, $140,000 of appraised value, raised from $100,000 when voters approved Proposition 13 on November 4, 2025 and applied from the 2025 tax year. The second is the homestead cap: from the year after the exemption is first granted, the appraised value used for tax may rise no more than 10% a year plus the value of new improvements, however fast the market moves. The third arrives at 65 or on disability: another $60,000 off the school value, raised from $10,000 by Proposition 11 the same night, and a ceiling that freezes the school district tax at the first qualifying year’s amount for as long as the owner lives there. None of it is automatic. The exemption is an application, not a right that attaches to the deed, and the cap does not start until the year after the exemption does.

The stakes are higher in Texas than in most states because the property tax is the Texas income tax. There is no state property tax; school districts, counties, cities, community colleges and special districts each set a rate on the value the appraisal district certifies, and combined rates in the metropolitan counties commonly run $1.60 to $2.20 per $100 of value, 1.6% to 2.2%, before exemptions. On a $450,000 house that is $7,200 to $9,900 a year with no relief. The homestead package takes a quarter to a third of it off for a homeowner under 65 and considerably more for one over.

How the bill is figured

The county appraisal district, a separate body from the tax office, sets the market value of every parcel as of January 1 and sends a notice of appraised value in April or May. Each taxing unit on the parcel then applies its own exemptions and its own rate, stated per $100 of value, and the county tax assessor-collector adds up the pieces into one bill mailed in October, due January 31, delinquent February 1. The appraisal notice and the bill both list each unit separately, which matters because the exemptions are not uniform: the $140,000 and $60,000 apply only to the school district, the $3,000 only to a county farm-to-market or flood control levy, and the optional exemptions only where a unit has adopted them.

Exemptions come off the capped appraised value, not the market value; the appraisal notice shows both. The Comptroller’s own FAQ pages still showed $40,000 and $10,000 in late 2026; the amounts above are from the 2025 bills and the constitution.

Who qualifies and how to apply

The home must be the principal residence of an individual owner, not a corporation or partnership, as of January 1, or, for a buyer, from the date of purchase and occupancy if the seller did not have the exemption on it that year. A house, condominium or manufactured home qualifies, with up to 20 acres of land used for residential purposes. A revocable living trust that names the occupant as beneficiary qualifies; an LLC does not, and an irrevocable trust depends on its terms, which is a question for the attorney before the deed is recorded (verify). Married couples are treated as owning 100% each. Unmarried co-owners get the exemption in proportion to their shares unless the property was inherited, in which case an heir living there may claim the whole.

The application is Form 50-114, filed with the appraisal district of the county where the house sits, on paper or, in most urban districts, online. There is no fee, and the companies that mail new owners an offer to file it for $50 or more are selling nothing. The form asks for a Texas driver license or identification card showing the property’s address; a license with the old address or a different Texas address will be rejected, and a new resident should get the license changed before filing, or ask the district to accept a backdated application once it is. The deadline is April 30 of the tax year. A late application is accepted up to two years after the February 1 delinquency date, so a 2026 exemption can still be claimed through January 2029 (verify), and the refund of the overpaid tax follows. Once granted the exemption renews each year without reapplying, though districts periodically send verification letters, and the owner must notify the district in writing before May 1 if the house stops being the homestead.

Buyers since 2022 have one more choice. If the seller had no exemption on the house that year, the buyer may claim a prorated exemption from the date of purchase rather than waiting for January 1. The cap still starts only after a full calendar year of exemption. If the seller did have the exemption, it carries the house through December 31 and the buyer’s own begins the next January 1; either way, the buyer’s bill in the year after purchase will be figured on full market value with no cap, and that is the year of sticker shock.

The 10% cap

The appraisal district values every property at market every year. For a homestead it also computes a second figure: the prior year’s appraised value plus 10%, plus the market value of any new improvement. The lower of the two is the appraised value that exemptions come off and rates apply to. In a year when the market rises 25%, the taxable value rises 10%. In a year when the market falls, the capped value can still rise toward market until it catches up. The gap between market and capped value is printed on the notice, and it compounds: a house bought in 2015 for $280,000 and worth $560,000 today may be taxable at $410,000, and the $150,000 difference is the cap benefit.

The cap belongs to the owner and the homestead together. Adding a spouse to the deed does not reset it, and a surviving spouse keeps it. A sale resets it: the buyer is taxed at market on the next January 1 and starts a new cap the year after that. That is why the same house can carry two very different bills a year apart, and why a buyer should never estimate the property tax from the seller’s bill. Unlike Florida, Texas has no portability; a cap benefit built up over fifteen years is simply gone when the owner moves, and only the over-65 ceiling transfers, as a percentage.

At 65, or on disability

The year a homeowner turns 65, two things happen if the appraisal district has the birth date, which the 50-114 asks for: the school exemption rises to $200,000 in all, and the school district tax for that year becomes the ceiling. The ceiling is a dollar amount, not a rate. It may fall if the district cuts its rate, and it rises only for new improvements such as an added room or a pool; ordinary repairs do not count. A homeowner who qualifies by disability, meaning receipt of Social Security disability benefits, gets the same package at any age. A person who is both 65 and disabled gets it once.

Three rules protect the ceiling over time. A surviving spouse who was 55 or older at the death keeps the ceiling and the exemption, on notice to the district. A senior who moves within Texas carries the ceiling as a percentage: if the old ceiling was 40% of what the full school tax would have been, the new home’s school tax is capped at 40% of its full amount, on a transfer certificate from the old appraisal district. And a senior who cannot pay may defer the whole homestead bill at 5% simple interest, no penalty, until 181 days after leaving the home, on Form 50-126; the lien is paid from the sale or by the estate. Counties, cities and junior college districts may adopt their own ceilings, and most of the large ones have (verify). The retiree’s side of all this, including a worked example, is in Texas for retirees.

Veterans, surviving spouses, fire, and the small business

Disabled veterans. A veteran with a service-connected disability rating gets $5,000 of value exempt at 10% to 29%, $7,500 at 30% to 49%, $10,000 at 50% to 69% and $12,000 at 70% or more, on any one property the veteran owns, not only the homestead; a veteran 65 or older with at least a 10% rating gets the $12,000. A veteran rated 100% disabled, or paid at 100% for individual unemployability, gets a total exemption from all property tax on the homestead under Tax Code 11.131. Surviving spouses of 100% disabled veterans, of service members killed in the line of duty and, from 2026 under Proposition 7, of veterans who died of a condition presumed service-connected under federal law, keep a total exemption as long as they do not remarry, and may carry the dollar amount to a new homestead.

Fire. Proposition 10 and SB 467 created, from January 1, 2026, a temporary exemption for the appraised value of a homestead improvement completely destroyed by fire, for the tax year of the fire, where the house was habitable before and uninhabitable for at least 30 days after. Apply at the appraisal district.

Business personal property. From tax year 2026, the first $125,000 of the market value of income-producing tangible personal property, the equipment, furniture and inventory of a business, at each location in a taxing unit is exempt under Tax Code 11.145 and Proposition 9, up from a $2,500 de minimis exemption. A sole proprietor or small LLC under that line need not file the annual rendition, only a statement certifying a reasonable belief the property is under the exemption. Furniture in a rental house a landlord owns counts; household goods in a home the owner lives in were never taxed.

Protesting the value

The appraisal district must send a notice of appraised value by April 1 for a homestead, or May 1 for other property, when the value rises (verify). The protest deadline is May 15 or 30 days after the notice was mailed, whichever is later; for 2027 May 15 is a Saturday and the deadline moves to Monday, May 17. File Form 50-132 with the appraisal review board, or any letter identifying the property and the complaint, and most districts take it online with an informal settlement offer before the hearing. The two grounds that work are market value, with comparable sales, and unequal appraisal, with the appraised values of comparable homes. Photographs of deferred maintenance help; complaints about the tax rate do not, because the review board has no power over rates. A homeowner who loses at the board may take a residence homestead of any value to binding arbitration through the Comptroller within 60 days, or to district court. A protest also preserves the right to pay only the undisputed amount by January 31.

What costs people the exemption

The exemption and the cap end when the house stops being the principal residence. Moving out and renting the whole house ends it; renting a room while living there does not. A temporary absence of less than two years with intent to return does not, and a longer absence is allowed for military service or a stay in a nursing or assisted living facility. Claiming a residence-based break anywhere else, another Texas homestead, another state’s homestead, a resident tuition rate, is evidence against it, and appraisal districts run matches against driver license and other states’ records. The penalty for an exemption wrongly claimed is the back tax for up to five years plus interest, added to the current bill (verify). The usual case is the couple with two Texas houses and an exemption on each, or the owner who moved out, kept the exemption and rented the house.