How Texas Homestead Exemptions Lower Your Property Tax

Why homesteads matter so much in Texas

Texas has no state income tax, so local governments and school districts rely heavily on property tax. In Houston and Dallas, combined rates for a home in the main school district were about $2.03 and $2.22 per $100 of value in 2025 — roughly 2% of a home's value every year before exemptions. On a $350,000 home that is about $7,000 to $7,800 a year. The homestead exemption is the single biggest way to lower that bill, and it is free to claim.

What counts as a homestead

A homestead is the home you own and live in as your principal residence. You can have only one. It can be a house, condo, townhome or manufactured home, and it can include up to 20 acres of land used with the home. You must own and occupy it on January 1 of the tax year to qualify for that year, though new buyers can often apply in the year they move in.

The layers of exemption

A Texas property tax bill is really several bills added together — one for each taxing unit, such as the school district, the city, the county, the hospital district and others. Each unit applies its own homestead exemption to its own share:

• School district: $140,000. Every school district must exempt $140,000 of a homestead's value. Voters approved raising it from $100,000 to $140,000 in November 2025 (Proposition 13). Because school taxes are usually the largest part of the bill, this is the most valuable piece.
• Over 65 or disabled: $60,000 more off school taxes (for a total of $200,000), plus a school tax ceiling that freezes the dollar amount of school tax as long as you own the home, apart from new improvements.
• Local optional exemptions: cities, counties and special districts may offer a percentage exemption of up to 20% of value (with a $5,000 minimum). The City of Houston, Harris County and the City of Dallas, Dallas County and Parkland Hospital all grant 20%. Many also offer extra fixed-dollar exemptions for seniors and people with disabilities.

A Houston example

Take a $350,000 homestead in Houston ISD with the 2025 rates. Without a homestead, the bill across seven taxing units is about $7,108. With the homestead, Houston ISD taxes only $210,000 ($350,000 − $140,000), and the City, County, Harris Health, Flood Control, Port and Department of Education each tax 80% of the value. The bill falls to about $5,071 — a saving of roughly $2,036 a year. More than $1,200 of that comes from the school exemption alone.

A Dallas example

In Dallas ISD, the school rate is higher (about $0.98 per $100), so the $140,000 exemption saves about $1,372 a year by itself. With the 20% exemptions from the City of Dallas, Dallas County and Parkland, a $400,000 homestead's bill falls from roughly $8,890 to about $6,615.

The 10% homestead cap

The less visible benefit is the appraisal cap. Once a home is a homestead, the value used for taxes can rise no more than 10% a year (plus new improvements), even if the appraisal district's market value jumps more. In fast-rising markets this cap can end up worth more than the exemption itself, because the gap between market value and capped value grows each year. The cap starts the year after you qualify, and it resets when the home sells.

Texas also added a temporary 20% cap on appraisal increases for non-homestead property valued at $5 million or less (through 2026), which helps landlords and second-home owners — not covered by the homestead rules.

How to apply

1. Get Form 50-114 (Residence Homestead Exemption Application) from your appraisal district — Harris Central Appraisal District for Houston, Dallas Central Appraisal District for Dallas — or apply online.
2. Include a copy of your Texas driver's license or ID showing the home's address.
3. File by April 30. Late applications are accepted for up to two years after the deadline, and the district will refund overpaid taxes.

Applying is free. Be wary of mailings that offer to file a homestead application for a fee.

Homesteads and protests work together

Exemptions lower the taxable value; a protest lowers the appraised value they are subtracted from. Each spring, appraisal districts mail notices, and owners can protest by May 15 (or 30 days after the notice). Because of the 10% cap, every dollar of value you remove in a protest also lowers the base for future years. Rate and Reason's protest savings estimators for Houston and Dallas show what a lower value would save.

Common mistakes

• Not applying after buying. The previous owner's exemption does not carry over.
• Forgetting the over-65 exemption. It starts the year you turn 65 — you do not have to wait until the next January.
• Renting out the home. A home that is no longer your principal residence is not a homestead.
• Paying a company to file. The application is free.