Appraisal and Tax Limitations

Limitation on Residence Homestead Value Increases
(Tax Code Section 23.23)

For a property owner who qualifies his or her homestead for exemptions in the preceding and current year, the property’s appraised value cannot increase more than 10% per year. Tax Code Section 23.23(a) sets a limit on the amount of annual increase to a residence homestead's appraised value to not exceed the lesser of:

• the property's market value; or
• the sum of:
  • 10% of the property's appraised value for the preceding year;
  • the property's appraised value the preceding year; and
  • the market value of all new improvements to the property.

Tax Code Section 23.23(e) defines a new improvement as an improvement to a residence homestead the property owner makes after the most recent appraisal that increases the property's market value and was not included in its appraised value for the preceding tax year. It does not include repairs to or ordinary maintenance of an existing structure, the grounds or another property feature.

The appraisal limitation only applies to a property receiving a residence homestead exemption. The limitation takes effect on Jan. 1 of the tax year following the year the property owner qualifies for the homestead exemption. It expires on Jan. 1 of the tax year following the year the property owner no longer qualifies for the residence homestead exemption.

Disaster Relief: Continuation of Residence Homestead Cap

Tax Code Section 23.23 provides for the limitation on the appraised value of residence homesteads to 10% of the appraised value for the preceding tax year plus the market value of all new improvements to the property. If an improvement is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage, the structure is not considered a new improvement.

If the replacement structure exceeds the square footage of the original structure or the replacement structure’s exterior is of higher construction quality and composition than the original structure, the replacement structure is considered a new improvement and is taxed accordingly. A replacement structure is not considered a new improvement to the extent necessary to satisfy square footage or the quality and composition of the exterior requirements of a disaster recovery program administered by the General Land Office or by a federally funded political subdivision of Texas.

School District Tax Limitation for Persons Age 65 or Older or Disabled
(Tax Code Section 11.26)

A school district may not increase the total annual property tax it imposes on the residence homestead of a homeowner who is age 65 or older or disabled. The limit is generally set at the amount of school district tax imposed in the year the homeowner first qualified. This is often called the tax ceiling or tax freeze.

• Who qualifies: Homeowners who are age 65 or older, or who meet the disability definition used for the residence homestead exemption, and who own and occupy the property as their residence homestead.
• Surviving spouses: A surviving spouse who is at least 55 years old may continue to receive the limitation on the same homestead if he or she meets certain conditions.
• Moving: A homeowner who qualifies for the limitation and moves to a new Texas residence homestead may be able to transfer a proportionate amount of the limitation. Contact the appraisal districts for both properties before or soon after the move.
• Improvements: The limitation generally does not apply to the tax on new improvements, other than repairs or ordinary maintenance. Adding to or enlarging a home can raise the tax ceiling.
• Tax rates and exemptions: The limitation applies to the total tax imposed. It does not change a homeowner's appraised value or market value.

Local Option Limitation (Tax Code Section 11.261)

A county, city or junior college district may adopt a similar limitation on its own taxes on the residence homesteads of homeowners age 65 or older or disabled.

Disaster Relief: Continuation of Tax Limitations on Homesteads of Elderly or Disabled

If a residence homestead is rendered uninhabitable or unusable by a casualty or by wind or water damage, the replacement structure a qualified individual or their surviving spouse owns may continue to receive the limitations on property taxes allowed by Tax Code Sections 11.26 and 11.261.

However, the replacement structure will be subject to an increase in tax if:

• the replacement structure's square footage exceeds that of the replaced structure as that structure existed before the casualty or damage occurred; or
• the replacement structure's exterior is of higher quality construction and composition than that of the replaced structure.

House Bill 851, effective Jan. 1, 2026, requires the Comptroller's office to annually report to the Legislature by Nov. 1 the number of residence homesteads receiving property tax limitations and deferrals.

*Note: Not all information is available as of Nov. 1, requiring a supplemental report after the initial report.