Texas Homestead Exemption Guide 2026: Save Thousands on Property Taxes
Table of Contents
- What Is the Homestead Exemption
- Who Qualifies for the Homestead Exemption
- How to File Your Homestead Exemption
- The $100,000 School District Benefit
- 10% Appraisal Cap Explained
- Additional Local Exemptions
- Over-65 and Disability Exemptions
- Common Mistakes to Avoid
- Homestead Exemption and Selling Your Home
- Timeline and Deadlines
- Impact on Your Monthly Payment
- Resources and Next Steps
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What Is the Homestead Exemption
The Texas homestead exemption is a property tax benefit available to homeowners who use their property as their primary residence. It reduces the taxable value of your home, which directly lowers your annual property tax bill. In a state with no income tax, property taxes are the primary revenue mechanism for local governments, making this exemption one of the most valuable financial tools available to Texas homeowners.
As of 2024, the mandatory school district homestead exemption stands at $100,000, meaning that amount is subtracted from your home's appraised value before school taxes are calculated. On a home valued at $450,000, you would only pay school district taxes on $350,000. At a typical school tax rate of $1.00 per $100 of assessed value, this single exemption saves approximately $1,000 per year. Additional exemptions from cities, counties, and special districts can increase your total savings further.
The homestead exemption also triggers the 10% appraisal cap, which limits how much your home's taxable value can increase from year to year. This cap is separate from the exemption amount and provides ongoing protection against rapid tax increases in appreciating markets like Austin, Dallas, and Houston.
Who Qualifies for the Homestead Exemption
Key Insight: Texas real estate offers exceptional opportunities for buyers, sellers, and investors across four major metros. With no state income tax, strong job growth, and diverse housing options, the Lone Star State continues attracting residents from across the nation seeking value and quality of life.
To qualify for the Texas homestead exemption, you must own the property and use it as your primary residence as of January 1 of the tax year. The property can be a single-family home, condominium, townhouse, or manufactured home on owned or leased land. You do not need to be a U.S. citizen to qualify, but you must have an ownership interest in the property and physically reside there.
You can only claim one homestead exemption at a time. If you own multiple properties, only your primary residence qualifies. Investment properties, vacation homes, and rental properties are not eligible. If you purchase a new home and move, you should file a new homestead exemption application with the appraisal district in your new county and notify your previous county that you have moved.
Trusts and LLCs can qualify for the homestead exemption under certain conditions. If the property is held in a qualifying trust where the beneficiary occupies the home as their primary residence, the exemption typically applies. However, properties held in standard LLCs or corporations generally do not qualify. Consult a tax professional if your property is held in an entity other than your personal name.
How to File Your Homestead Exemption
Filing for the homestead exemption is straightforward and free. You submit an application to the Central Appraisal District (CAD) in the county where your property is located. Most Texas counties now offer online filing through their CAD website. You will need to provide your property address, legal description (found on your deed or closing documents), a copy of your Texas driver's license or state ID showing the property address, and the last four digits of your Social Security number.
The deadline to file is April 30 of the tax year you want the exemption to apply. However, you can file a late application up to two years after the delinquency date for the taxes on the property. For the best results, file as soon as you close on your home. Many counties process applications within 30-60 days and will confirm your exemption status by mail or email.
Once approved, the homestead exemption remains in effect for as long as you own and occupy the property. You do not need to reapply each year. However, if you make significant changes to the property, such as adding a second living unit or converting part of the home to commercial use, you should contact your CAD to ensure your exemption remains valid.
The $100,000 School District Benefit
The centerpiece of the Texas homestead exemption is the $100,000 mandatory school district exemption. This benefit was increased from $40,000 to $100,000 by voter-approved Proposition 4 in November 2023, providing substantial additional savings for every homesteaded property in Texas. School district taxes make up the largest portion of most homeowners' property tax bills, typically 40-55% of the total.
To understand the impact, consider a home appraised at $500,000 in a school district with a tax rate of $0.95 per $100 of assessed value. Without the exemption, your school taxes would be $4,750. With the $100,000 exemption, your taxable value drops to $400,000 and your school taxes become $3,800, a savings of $950 per year. Over a decade of homeownership, that exemption saves nearly $10,000 in school taxes alone.
The school district exemption applies uniformly across Texas. Every school district must honor it, regardless of local policies. This makes it the most reliable and consistent property tax benefit in the state. Combined with the 10% appraisal cap that the homestead triggers, the long-term savings compound significantly, especially in rapidly appreciating markets where property values have outpaced the cap for several consecutive years.
10% Appraisal Cap Explained
One of the most powerful but often misunderstood benefits of the homestead exemption is the 10% annual appraisal cap. Once your homestead exemption is in place, your property's appraised value for tax purposes cannot increase by more than 10% per year, plus the value of any new improvements. This cap applies regardless of how much the actual market value of your home increases.
In practice, this means that if your home was appraised at $400,000 last year and the market value jumped to $500,000, the appraisal district can only tax you based on a value of $440,000 (a 10% increase). The gap between your capped taxable value and the actual market value grows wider each year in appreciating markets, creating increasing savings over time. In Westlake and other high-appreciation areas, longtime homeowners may have capped values that are hundreds of thousands below market value.
The cap resets when the property is sold. The new buyer inherits the full current market value as their starting appraised value. This is an important consideration for both buyers and sellers: buyers should budget based on full market value taxes, not the previous owner's capped amount, and sellers should understand that high taxes on reset may affect the pool of qualified buyers for their home.
Additional Local Exemptions
Beyond the mandatory $100,000 school district exemption, many Texas cities, counties, and special districts offer additional homestead exemptions. These local optional exemptions can take the form of a percentage reduction (up to 20% of assessed value) or a fixed dollar amount. The availability and amounts vary widely by jurisdiction, so it is worth checking with your local appraisal district to see what is available in your area.
In the Austin metro, Travis County offers an additional 20% homestead exemption, and the City of Austin provides a $5,000 exemption plus additional benefits for seniors. In Dallas, both the city and county offer percentage-based exemptions. Houston provides a 20% general homestead exemption through the city. San Antonio and Bexar County also offer their own local exemptions.
To maximize your savings, ensure you have applied for every exemption available in your jurisdiction. Your county appraisal district's website typically lists all available exemptions. A single application form usually covers all exemptions you are eligible for, including over-65, disabled person, and disabled veteran exemptions if applicable.
Over-65 and Disability Exemptions
Texas provides enhanced property tax benefits for homeowners who are 65 or older or who have a qualifying disability. The over-65 exemption includes an additional $10,000 school district exemption on top of the standard $100,000, plus a mandatory school district tax ceiling that permanently freezes your school taxes at the level they were in the year you turned 65. Your school taxes cannot increase above this ceiling regardless of future appraisal increases.
Many cities and counties extend similar freeze provisions for over-65 homeowners. In Austin, seniors benefit from both a city tax freeze and additional exemptions. The combination of state and local over-65 benefits can reduce a senior's total property tax bill by 40-60% compared to a non-exempt homeowner on an identical property. The over-65 exemption also allows tax deferral, meaning seniors can defer payment of property taxes with interest accruing at 5% per year, with no penalty or foreclosure action while they occupy the home.
Disabled veterans with a 100% disability rating from the VA qualify for a complete exemption from property taxes on their homestead. Veterans with partial disability ratings receive exemptions proportional to their rating. Surviving spouses of disabled veterans may also qualify for continued exemption benefits. These veteran-specific benefits are among the most generous property tax provisions in any state.
Common Mistakes to Avoid
The most common mistake is simply failing to file. The homestead exemption is not automatic. You must submit an application to your county appraisal district. Thousands of Texas homeowners miss out on hundreds or thousands of dollars in annual savings because they assumed the exemption was applied at closing or inherited from the previous owner. Check your property record on the appraisal district website to confirm your exemption is active.
Another frequent error is not updating your driver's license to reflect your new address before filing. Most counties require your Texas ID to match the property address. If you recently moved, update your license first, then file the exemption. Additionally, some homeowners forget to file when they refinance, mistakenly believing the refinance process resets their exemption. It does not, but it is still worth verifying your status after any major transaction.
Filing late is not as costly as not filing at all, since you can file up to two years retroactively. However, filing promptly ensures you capture the full benefit from the start. If you discover you have been paying taxes without a homestead exemption, contact your appraisal district immediately to file a late application and potentially receive a refund for overpaid taxes in prior years.
Homestead Exemption and Selling Your Home
When you sell your homesteaded property, the exemption and appraisal cap end for that property. The new buyer starts fresh with the current market value as their appraised value. This transition can create significant sticker shock for buyers purchasing from long-time homeowners whose capped values were well below market. Buyers should always calculate their expected tax bill based on the full purchase price, not the seller's historical tax amount.
If you are buying a new primary residence in Texas, you can file a homestead exemption on the new property as soon as you close and occupy it. The exemption applies on January 1 of the following year if you file before April 30. Some counties offer a partial-year benefit for mid-year purchases, but this varies. Contact your new county's appraisal district for specific policies.
For sellers, the homestead exemption and appraisal cap can actually be a selling point in your marketing. A home with a well-established cap offers lower taxes to the current owner, which can be highlighted when showing the property. However, be transparent with buyers about what their taxes will be after the cap resets, as failing to disclose this could create post-closing disputes.
Timeline and Deadlines
The key dates for the Texas homestead exemption revolve around the January 1 ownership and occupancy requirement and the April 30 filing deadline. You must own and occupy the property as your primary residence on January 1 of the tax year for which you are claiming the exemption. The application must be filed with your county's Central Appraisal District by April 30 of that year.
If you close on a home in March and immediately move in, you can file for the exemption right away and it will apply to that year's taxes (since you will own the home on the following January 1 at the latest). If you close in November and move in by December 31, you can file in January and the exemption will apply to the new tax year beginning January 1.
Late applications are accepted up to two years after the delinquency date for the taxes. This means if you forgot to file for 2025 taxes, you could still file a late application in early 2027 and receive the exemption retroactively. Contact your appraisal district for the specific procedures for late filing, as they may require additional documentation.
Impact on Your Monthly Payment
If you have a mortgage with an escrow account, your homestead exemption directly affects your monthly payment. Your lender collects estimated property taxes monthly as part of your escrow, and when the exemption reduces your tax bill, the escrow amount decreases as well. Most lenders perform an annual escrow analysis and adjust your payment accordingly, typically in the year following your exemption approval.
For a $450,000 home where the homestead exemption saves $1,200 per year in total taxes, that translates to a $100 monthly reduction in your mortgage payment. While $100 per month may seem modest, over a 30-year mortgage it adds up to $36,000 in savings. Combined with the appraisal cap benefits, the total lifetime savings can be substantial, particularly in areas with strong appreciation.
If your escrow account develops a surplus after the exemption is applied, your lender may refund the excess or apply it to future payments. If you pay your taxes directly (without escrow), the savings appear immediately on your tax bill. Either way, the homestead exemption provides tangible, recurring financial relief that compounds over the duration of your homeownership.
Resources and Next Steps
Every county in Texas has a Central Appraisal District with a website where you can look up your property, verify your exemption status, and file applications online. The Texas Comptroller's office provides a statewide directory of all appraisal districts at comptroller.texas.gov. Most CAD websites also offer detailed guides to all available exemptions in your jurisdiction.
If you are buying a home in Texas, make filing the homestead exemption part of your post-closing checklist. Your real estate agent or title company should remind you, but ultimately the responsibility falls on you as the homeowner. Our Home Buying Guide 2026 includes a complete post-closing checklist that covers exemption filing and other essential tasks.
For personalized guidance on how the homestead exemption affects your specific situation, including combined savings with over-65, disability, or veteran exemptions, contact our team. We help buyers throughout Texas understand the full cost of homeownership, including property taxes, and can connect you with tax professionals who specialize in Texas property tax optimization.
Sheila Smith Oliver is the founder and principal broker of Dwellverse, with over two decades of experience in Texas residential real estate. She has personally facilitated 500+ successful transactions across Austin, Dallas, Houston, and San Antonio, totaling over $250 million in sales volume. Sheila specializes in luxury properties, relocation services, and investment strategy.
Frequently Asked Questions
The homestead exemption saves approximately $800-$1,200 per year on school district taxes alone through the $100,000 mandatory exemption. Additional local exemptions from cities and counties can increase total savings to $1,500-$2,500 annually depending on your location and property value.
Yes, most Texas counties now accept homestead exemption applications online through their Central Appraisal District website. You will need your property address, Texas driver license or ID showing the property address, and the last four digits of your Social Security number.
The homestead exemption ends when you sell the property. The new owner must file their own application. The 10% appraisal cap also resets, meaning the new owner will be taxed at the current full market value. This is important for buyers to understand when estimating their future tax bill.
No, once your homestead exemption is approved, it remains in effect for as long as you own and occupy the property as your primary residence. You do not need to reapply annually. However, you should verify your exemption status periodically on your county appraisal district website.
Yes, Texas allows late filing of homestead exemption applications up to two years after the delinquency date for the taxes on the property. If you missed the deadline, you can still file and may receive retroactive benefits. Contact your county appraisal district for specific late filing procedures.
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Last updated: 2026-01-27