Officials report eliminating property taxes would cost Texas over $81 billion — per year

As Republican lawmakers in Texas continue pushing for the elimination of property taxes, a meeting among officials Wednesday determined it would be nearly impossible — and at great cost.

Texas has one of the highest property taxes in the country, to account for the lack of income taxes and its ever-growing population. Property tax increases also correspond with rising property values nationwide.

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Cutting property taxes would cost $81B per year, officials say

Texas Lt. Gov. Dan Patrick asked state officials to tally the total cost of eliminating local property taxes. Earlier this year, Patrick named property tax relief as a priority for the conservative majority, along with school choice and strengthening the power grid, in the 89th Legislative Session beginning January 2025.

State budget officials met at the Capitol Wednesday to review the math, coming up with a staggering figure of over $81 billion. And that's just the annual cost.

Without property taxes in 2023, Texas would have lost around $39.5 billion, the Legislative Budget Board reported to the Texas State Finance Committee. The largest share of a property owner's taxes consists of school property taxes, which help fund teachers' salaries and new facilities, among other uses.

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An additional $42 billion in property taxes was collected from cities, counties and special taxing districts in 2023, the Texas Tribune reports .

The $81.5 billion required to eliminate all local property taxes would need to be cut from the state budget or compensated by other taxes. The former would mean forgoing over half of Texas' current two-year budget of $144 billion, while the latter would require sales taxes to nearly triple to 22%.

Neither option appealed to senators on Wednesday.

Senate Finance Chair Joan Huffman, R-Houston, noted several areas that would suffer if local property taxes were eliminated.

"That’s foster care, Child Protective Services, Medicaid, Department of Family Services, and a lot of this federally mandated, of course, costs that we have to do," Huffman said. "All the money put on higher education, all the money in public education, all the money for Medicaid, all the money for mental health, human trafficking, all the things that the state has made priorities we would not have the funding for. Is that correct?"

Another Houston Republican Senator, Paul Bettencourt, who is leading Patrick's tax reform efforts, warned against increasing sales taxes that may encourage consumers to travel over state lines and "distort everything in the market."

"You have to set up something sustainable," Bettencourt said. "And when we look at these changes, we have to not only pay for it now, but in the future."

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Texans frustrated by high property taxes

The Lone Star State's high property tax rates have been the subject of criticism for years — and the irritation is only escalating along with the rise of property values.

The median value of a house in Texas is $238,000, a jump of $35,400 from last year's median value, according to WalletHub's 2024 property tax report . With an effective real estate tax of 1.63%, the average Texan pays $3,872 in property taxes.

In July 2023, Texas Gov. Greg Abbott signed a $18 billion property tax-cut deal to reduce taxes by over 40% for around 5.7 million Texans.

This article originally appeared on Austin American-Statesman: Officials report eliminating property taxes would cost Texas over $81 billion — per year