Texas Homestead Exemption 2026: $140,000 School Tax Exemption Explained

Texas Homestead Exemption 2026: $140,000 Off Your School District Tax Bill

The homestead exemption is the single largest property tax break available to Texas homeowners — and it just got significantly bigger. The 89th Texas Legislature raised the mandatory school district homestead exemption from $100,000 to $140,000, effective for tax year 2025 onward under Texas Tax Code §11.13(b). That single change eliminates school district taxes entirely on the first $140,000 of your home's appraised value.

For a homeowner with a $350,000 home in the Austin area, the $140,000 exemption alone reduces the school district taxable value to $210,000 — saving roughly $1,960 per year compared to owning the same home without any exemption. Compare that to a similar home in New Jersey, where the property tax bill could reach $8,000–$9,000 annually with no comparable relief mechanism.

This guide explains exactly how the $140,000 exemption works, what additional relief is available for seniors and disabled homeowners, how to apply by the April 30 deadline, and what your effective tax rate looks like after all exemptions are applied. Use our Property Tax Calculator by State to model your specific situation.

The $140,000 School District Exemption: How It Works

Texas property tax is levied by multiple local taxing units — school districts, counties, cities, and special districts (water, hospital, community college). Of these, school district taxes are typically the largest single line item, accounting for 40%–60% of a typical Texas property tax bill.

Texas Tax Code §11.13(b) requires every school district in the state to grant a mandatory homestead exemption on the first $140,000 of a qualified homestead's appraised value. This amount was raised from $100,000 by the 89th Texas Legislature, effective tax year 2025. The exemption applies only to the school district portion of your bill — county, city, and other taxing units calculate their taxes on a different (typically higher) taxable value.

Here is how the calculation works for a home with a $350,000 appraised value:

• Appraised value: $350,000
• Less school district homestead exemption: −$140,000
• School district taxable value: $210,000
• At a school district combined rate of approximately $1.00 per $100 valuation: $210,000 × 0.01 = $2,100 school district tax

Without the exemption, that same home would owe $350,000 × 0.01 = $3,500 in school district taxes. The $140,000 exemption saves $1,400/year on school taxes alone.

The exemption is applied automatically once your initial homestead application is approved — you do not need to re-apply each year as long as you continue to own and occupy the home as your principal residence.

The 10% Annual Appraisal Cap: Protecting You From Rapid Value Increases

Beyond the dollar exemption, Texas Tax Code §23.23 provides a second major protection: the 10% annual cap on appraised value increases for homestead properties. Once your home qualifies as a homestead for any tax year, the appraised value used for calculating taxes cannot increase by more than 10% from the prior year's appraised value — regardless of what the open market says your home is worth.

This cap applies to all taxing units simultaneously (school district, county, city, and others). It does not apply in the first year of homestead qualification — the cap kicks in from the second year onward.

Example: Your home is appraised at $300,000 this year. Even if the county appraisal district determines the true market value has jumped to $360,000 the following year (a 20% increase), the taxable appraised value for homestead purposes can only rise to a maximum of $330,000 (10% cap). The difference between $360,000 and $330,000 is called the homestead cap value — it is not taxed.

This cap is particularly valuable in fast-growing Texas markets like Austin, Dallas, and Houston where market values have historically risen well above 10% in strong years. Over multiple years, the cumulative benefit of the cap can be larger than the dollar exemption itself.

Optional 20% Local Government Exemption

In addition to the mandatory $140,000 school district exemption, Texas Tax Code §11.13(n) allows counties, cities, and special districts to grant an optional additional homestead exemption of up to 20% of a property's appraised value, with a minimum exemption of $5,000. School districts cannot grant this optional exemption — it is solely at the discretion of other local taxing units.

Whether you receive this exemption depends entirely on where you live and the decisions made by your specific county commissioners court, city council, or special district board. Some taxing units offer the full 20%; others offer a smaller percentage or nothing at all.

For a $350,000 home where the county grants a 20% exemption:

• County appraised value: $350,000
• Less 20% optional exemption: −$70,000
• County taxable value: $280,000

If the county/city/other combined rate is approximately $0.50 per $100: $280,000 × 0.005 = $1,400, compared to $350,000 × 0.005 = $1,750 without the exemption — a saving of $350/year on non-school taxes.

To find out if your county or city grants an optional exemption, contact your county appraisal district or check your annual Notice of Appraised Value, which lists the exemptions applied to your account by each taxing unit.

Senior Citizens and Disabled Homeowners: Additional Exemptions and Tax Ceiling

Texas provides two powerful additional protections for homeowners aged 65 and older, or who are legally disabled (as defined under the Social Security Administration's disability standards):

Additional $10,000 School District Exemption

Under Texas Tax Code §11.13(c), homeowners who are 65 or older or disabled receive an additional $10,000 exemption on top of the standard $140,000 school district exemption. This brings the total school district exemption for qualifying seniors and disabled homeowners to $150,000.

For a $350,000 home owned by a 65+ homeowner:

• School district taxable value: $350,000 − $150,000 = $200,000
• At $1.00 per $100: $200,000 × 0.01 = $2,000/year in school district taxes

School District Tax Ceiling (Tax Freeze)

This is perhaps the most valuable long-term benefit for older Texans. Under Texas Tax Code §11.261, once a homeowner qualifies for the age 65+ or disabled exemption, the school district taxes on that home are frozen at the dollar amount in the qualifying year. Even if the appraised value rises every year and school district tax rates change, your school district tax bill can never exceed the amount you paid in the year you first qualified.

This ceiling is transferable — if you move to a new home of equal or lesser value in Texas, the ceiling transfers to the new home. If you move to a more expensive home, the ceiling is calculated proportionally.

Counties, cities, and special districts may also adopt a tax ceiling for 65+ homeowners, but they are not required to. Check with your local appraisal district to see which taxing units in your area have adopted this optional ceiling.

How to Apply for the Texas Homestead Exemption

The homestead exemption does not apply automatically to your property — you must file an application. Here are the steps:

1. Verify eligibility: You must own the property and use it as your principal residence on January 1 of the tax year. You can only claim one homestead exemption in Texas (and cannot claim one in another state simultaneously).
2. Obtain the application form: Download Form 50-114 (Residence Homestead Exemption Application) from the Texas Comptroller's website at comptroller.texas.gov or pick it up directly from your county appraisal district office.
3. Submit by April 30: Under Texas Tax Code §11.43, the standard deadline to file for exemptions is April 30 of the tax year. For a 2026 exemption, you must file by April 30, 2026.
4. Late filing window: If you miss the April 30 deadline, you may still file a late application within 2 years of the delinquency date. A late filing is accepted but may result in a penalty.
5. Required documentation: The application requires your Texas driver's license or state ID showing the property address, and for senior/disabled exemptions, proof of age (birth certificate or government-issued ID) or a disability determination letter.
6. One-time filing: Once approved, you do not need to re-apply each year. The exemption remains on your account as long as your ownership and residency status stays the same.

File directly with your county appraisal district (CAD) — not the tax assessor-collector. Each county has its own CAD (e.g., Travis Central Appraisal District for Travis County/Austin). Find your local CAD at the Texas Comptroller's website.

Worked Example: $350,000 Home in Suburban Texas (Travis County / Austin Area)

The following example uses a $350,000 home in the Austin metro area (Travis County) to illustrate the combined effect of all exemptions. Tax rates are approximate and vary by specific location within the county.

Annual saving from homestead exemptions: approximately $1,610/year on this example home. The exact saving depends on whether your county/city grants the optional 20% exemption and the combined rate in your specific tax jurisdiction.

For context: the same $350,000 home in New Jersey would face an annual property tax bill of approximately $8,000–$9,000 with no equivalent exemption mechanism. Texas homeowners save an estimated $4,360–$5,360 per year compared to a comparable New Jersey property owner — even before accounting for Texas's zero state income tax.

Texas vs New Jersey and California: Property Tax Comparison

Texas is often cited as a high property tax state — and measured as a percentage of home value, that is accurate. But the homestead exemption system, combined with the absence of a state income tax, makes the overall tax burden for Texas homeowners significantly lower than comparable states with high property taxes and high income taxes.

• Texas effective rate on a $350,000 home (with exemptions): ~$3,640/year (~1.04% effective rate on market value)
• New Jersey effective rate on a $350,000 home: ~$8,000–$9,000/year (~2.3%–2.6%). NJ also levies a state income tax up to 10.75%.
• California effective rate on a $350,000 home: California's Proposition 13 caps assessed value increases at 2% per year from purchase price, so newer buyers face lower rates but long-term owners in appreciating markets have extremely low assessed values. State income tax reaches 13.3% on high earners.

The key distinction: Texas's relief comes through exemptions applied annually at current market value (plus the 10% cap), while California's relief is baked into a frozen assessed value from purchase. For homeowners who move frequently or recently bought, Texas's system is generally more predictable. For homeowners who have owned the same home for decades in a rising market, California's Prop 13 freeze historically provided larger savings — but that gap has narrowed for homeowners in moderate-appreciation Texas markets who benefit from the 10% appraisal cap year after year.