What Austin Homeowners Need to Know About the New $140K Homestead Exemption

TL;DR
 As of January 2025, Austin homeowners will receive a $140,000 homestead exemption on school district property taxes, up from $100,000. That means most homeowners will save about $416 per year. It applies only to owner-occupied residences and the school district portion of property taxes. The new exemption is now part of the Texas Constitution.

What Changed with Proposition 13

Texas voters passed Proposition 13 on November 4, 2025. It increases the residence homestead exemption for school district taxes from $100,000 to $140,000. That $40,000 difference, taxed at roughly $1.04 per $100 translates to $416 per year in tax savings for most homeowners.

The exemption only applies to primary residences. Investors, second homes, and rental properties do not qualify. And you must have a homestead exemption already filed with your county appraisal district to receive the benefit.

How Much You’ll Save

Assuming a school district tax rate of $1.04 per $100 (standard in many Austin ISDs):

• $500K home: Taxable value drops from $400K to $360K. You save $416/year.
• $1M home: Taxable value drops from $900K to $860K. Still $416/year.
• $2M home: Same savings. It’s a flat benefit, not scaled.

Who Benefits Most

The exemption doesn’t scale with price, but it’s meaningful across brackets:

• Middle-income homeowners get real annual relief
• Relocating buyers from high-tax states (e.g., NJ, IL) gain predictability
• Luxury buyers gain a constitutional layer of tax stability
• Sellers gain a new talking point for listing value

Impact on Real Estate

The increase won’t move markets, but it strengthens cost-of-holding narratives. Buyers now see Texas as even more tax-stable compared to high-burden states. That can boost relocation confidence and support long-term value growth.

Pros, Cons, and Unknowns

✅ Pros:

• $416/year in tax savings for most owners
• Locked into the Texas Constitution
• Boosts long-term affordability
• Strengthens buyer and seller narratives

⚠️ Cons:

• Only applies to school taxes, not city or county
• Flat benefit, even for high-end homes
• Appraisals can still rise, offsetting savings
• School districts depend on state reimbursement to offset lost revenue

What to Do Next

If you haven’t filed your homestead exemption, do it now with your local appraisal district. Want to know how much you’d save based on your specific home value and tax rate? Let’s run the numbers together.

Want help understanding how tax changes affect your home's value? Let's talk about your property goals in Austin.