Texas governor joins growing movement to end property taxes

Abbott for Governor campaign

An ongoing battle in Texas against rising property taxes could turn into an all-out war as Gov. Greg Abbott sets his sights on ending public school district taxation for homeowners.

"It's time that we drive a stake through the heart of the ability of local property tax hikes in the future," the Republican said when he launched his campaign for a fourth term in office last month in Houston.

Abbott's proposed constitutional amendment to eliminate school property taxes, which is light on details, comes as ad valorem taxation has increasingly become a target for cuts or annihilation across the nation. Legislation and petition drives are popping up in various states in response to escalating tax bills fueled by rising home values, as well as local government and school district budget needs. 

"There's a property tax revolt of sorts, where there's a clamor for real relief, and many states are considering if that relief should include eliminating the property tax entirely," said Manish Bhatt, a senior policy analyst with the Tax Foundation's Center for State Tax Policy.

Property taxes account for over 70% of revenue for local public entities, while replacement options could include less-efficient revenue sources such as sales taxes, which may have to climb to regressively high levels, he said, noting that homeowners could still be on the hook to pay property taxes earmarked to pay off outstanding debt.

"Property tax elimination efforts should be taken very seriously because the consequences to local governments and the economy as a whole could be very, very serious and very disastrous," Bhatt said, adding that states should instead opt for "strong collection limits" and other reforms that benefit all property classes.

No state has yet to eliminate the tax, according to Bhatt. 

North Dakota voters rejected a property tax prohibition in November 2024.

In Florida, where Gov. Ron DeSantis has embraced eliminating the tax on homesteads, several measures are working their way through the legislature.

After a petition drive in Nebraska last year for a constitutional amendment to end income, property, and inheritance taxes failed to obtain enough signatures, another was launched this year.  

In its 2026 outlook for local governments and K-12 school districts, S&P Global Ratings said more proposals aimed at reducing property taxes are expected. 

"These changes would incrementally tighten revenue constraints for local governments, which are already significant in some states," the outlook said. "This could require fiscal adjustments to balance budgets and weigh on the institutional framework that supports revenue and  expenditure balance and fiscal predictability for local government credit ratings."

In Texas, Abbott and other state officials have expressed frustration with rising property tax bills despite plowing billions of dollars in state funds into tax relief. 

Home property values have risen sharply in the Lone Star State; the all-transactions house price for Texas increased 48% in the five years ending in the third quarter of 2025, according to Federal Housing Finance Agency Data published by the Federal Reserve Bank of St. Louis.

Abbott's campaign office did not respond to questions about the treatment of property taxes backing billions of dollars of school district bonds and the replacement of schools' tax-derived operating revenue under his elimination proposal.  

For tax year 2023, schools collected an estimated $28.3 billion in maintenance and operations property taxes and $11.2 billion in interest and sinking taxes, which are earmarked for bond payments, according to a November 2024 Texas Legislative Budget Board presentation.  

In a CBS Texas interview last month, Abbott said: "The way we are able to pay for it is through the budget surplus that we run year after year after year. Our annual surplus exceeds the amount that it would cost for the state to fully fund education if we implement the cuts that I'm proposing."

Texas' budget balance, which reached a record $39.43 billion heading into the fiscal 2024-25 biennium, was projected by the state comptroller to total nearly $24 billion at the Sept. 1 start of fiscal 2026-27.

The state's overflowing coffers, which include a rainy day fund projected to hit a $26.5 billion statutory cap in fiscal 2026, led to a series of voter-approved constitutional amendments, allocating some of the surplus to one-time endeavors, as well as increasing the amount of a home's value that is exempted from school property taxes with the state backfilling the losses as part of $51 billion in tax relief approved for the current biennium.

"The concern is what happens when we have an economic downturn, we have a state budget crunch, and lawmakers have to decide what to cut?" said Shannon Halbrook, director of the Invest in Texas team at Every Texan, a public policy group that focuses on equity. "Obviously education is a huge part of the state budget, so it might mean that they would have to make cuts to schools."

Abbott's five-step plan also includes spending limits on local governments, a two-thirds voter approval supermajority requirement for property tax hikes, and giving voters the ability to force an election to roll back tax rates. Property appraisals for tax purposes would occur only once every five years and the 10% cap on appraisal growth for homesteads would be lowered to 3% with the lower cap expanded to all properties.

James Quintero, policy director at the conservative Texas Public Policy Foundation, said everything, including limits on local spending, property tax revenue, and debt, along with a balanced budget requirement, should be on the table when the legislature returns to session in 2027. 

"It's time to get control of runaway local public finance and in so doing, reduce the cost of government borne by everyday Texans," he said in an email. 

Last week, the state's Republican Lt. Gov. Dan Patrick unveiled his "Operation Double Nickel" plan, which would ask voters to boost the homestead exemption for school property taxes they just increased on the November ballot to $140,000 from $100,000, by another $40,000. The 65 and older homeowner eligibility threshold for an additional $60,000 exemption passed by voters, along with a freeze on school property taxes paid, would drop to 55 under his plan. 

Patrick warned that eliminating all local property taxes in Texas would require a huge and "unrealistic" rate increase in the sales tax, which is the largest general fund revenue source for the state, which does not levy an income tax. 

Lucy Dadayan, principal research associate at the Urban-Brookings Tax Policy Center, who tracks states' tax revenue, said using state money as a replacement would not be a good move. 

"Most surpluses can very quickly turn into shortfalls given the current economic and policy environment, and there are lots of uncertainties ahead, particularly driven by the federal policy changes," she said, adding that while states with high-income taxpayers are getting a revenue boost from stock market performance, sales tax collections for most states are declining on an inflation-adjusted basis. 

Oklahoma is taking steps to join the anti-property tax movement. 

Republican State Sen. David Bullard last week filed the Ad Valorem Reform Act of 2026, which would put a constitutional amendment on the ballot to end property taxes for residents age 65 and up who own their primary residence outright, while freezing the tax for all other homeowners who qualify for a homestead exemption. 

"For far too long, Oklahomans have essentially been renting their property from the government," Bullard said in a statement. "We can eliminate this unjust tax, but any changes must be implemented slowly and carefully to ensure we don't defund our schools or counties. That's why I'm proposing shifting to a fair tax system that funds schools and local governments through thoughtful adjustments to state consumption taxes."

An initiative petition filed with the Oklahoma Secretary of State on Nov. 21 seeks to put a constitutional amendment on the ballot next year to phase out property taxes for owner-occupied homes. 

The petition calls for exempting assessed value from property taxes starting with 33 1/3% in tax year 2027, 66 2/3% in 2028, and 100% in 2029. The exemptions would not apply to property taxes earmarked for bonds issued by school districts, cities, counties, and other political subdivisions prior to Dec. 31, 2026.

Two state lawmakers backing the petition did not respond to emailed questions, including what would replace lost property tax revenue, which would total about $1.2 billion a year starting in 2029, according to the petition.