The Texas Legislature recently passed two significant bills, Senate Bill 2 (SB2) and Senate Bill 3 (SB3), that have far-reaching implications for homeowners. These bills introduce substantial changes to the property tax system and the franchise tax system in Texas. In this blog post, we will delve into the key provisions of these bills and their potential impact on homeowners.
Key Provisions of SB2 and SB3:
Senate Bill 2, introduces several changes to the property tax system. One of the most significant changes is the reduction of the “rollback tax rate” from 8% to 3.5% for most taxing units. This new rate limits the amount by which the property tax rate can be increased without voter approval (SB2, Page 1).
SB3 increases the total revenue exemption for the franchise tax. A taxable entity is not required to pay any tax and is not considered to owe any tax for a period if the amount of the taxable entity’s total revenue from its entire business is less than or equal to $2.47 million, up from the previous $1 million limit (SB3, Page 1).
Implications for Homeowners:
For homeowners, these changes could potentially reduce the property tax burden and the franchise tax burden, thereby making homeownership more affordable. The reduction in the rollback tax rate could potentially limit the increase in property taxes, thereby making homestead properties more affordable for homeowners.
Moreover, the increase in the total revenue exemption for the franchise tax could benefit homeowners who own businesses with total revenue of less than $2.47 million. These businesses would not be required to pay any franchise tax and would not be considered to owe any franchise tax (SB3, Page 1).
The Texas SB2 and SB3 bills introduce significant changes to the property tax system and the franchise tax system that could impact homeowners. While these changes have the potential to reduce tax burdens and increase transparency, their impact can vary depending on various factors. As always, it’s recommended to consult with a tax professional or legal advisor for specific advice.
Stay tuned to our blog for more updates and insights on homeownership in Texas!