AUSTIN — As lawmakers and Gov. Greg Abbott push proposals to reduce homeowner property-tax bills, analysts warn that the structure of Texas’ tax system can leave lower-income families paying a larger share of their income than wealthier residents.
Regressive ranking draws scrutiny
The Institute on Taxation and Economic Policy (ITEP) ranks Texas among the states with the most regressive state and local tax systems. ITEP data cited by tax analysts show that families in the bottom 20% of earners in Texas pay an estimated 4.5% of their income in property taxes, while those in the top 1% pay about 2.7%.
That pattern has renewed debate in Austin as the House Ways & Means Committee prepares a Sept. 15 hearing on how to expand property-tax relief passed by the Legislature earlier this year. Gov. Abbott has positioned an "affordability" agenda as a priority, saying it would substantially reduce typical homeowner bills.
Why property taxes can hit lower-income households harder
Analysts say the disparity stems from the interaction of property taxes with the state’s broader tax choices — chiefly, the absence of a personal income tax. A tax on property measures the value of an asset rather than the owner’s ability to pay, which can leave households with modest incomes carrying a larger share of their earnings toward local property levies.
"You tend to ask a certain group of people, by that I mean lower and middle income households, to contribute larger shares of their income than wealthier households," said Neva Butkus, a senior analyst at ITEP.
That dynamic can be particularly acute for homeowners who are asset-rich but cash-poor — for example, elderly residents on fixed incomes who live in relatively valuable homes.
Policy fixes on the table
State leaders are discussing a range of approaches to reduce homeowners’ bills and increase predictability in local appraisals. Abbott has called for an overhaul of the property-tax system and told voters they "shouldn't be taxed out of their homes." His office has said proposed reforms would deliver significant savings for the average homeowner, though specific legislative language and fiscal trade-offs remain to be resolved.
Proposals policymakers may consider include:
- Caps or limits on annual appraisal increases;
- Expanded homestead exemptions or circuit-breaker credits targeted to lower-income homeowners;
- Changes to the way local taxing units are funded to reduce reliance on property wealth.
Numbers matter — and they vary by income
The headline figures underscore how distributional effects differ across the income spectrum. The contrast cited by ITEP — 4.5% for the bottom 20% versus 2.7% for the top 1% — illustrates the point that property levies can function like a reversed income tax when no progressive income levy exists.
| Income group | Estimated share of income paid in property taxes |
|---|---|
| Bottom 20% | 4.5% |
| Top 1% | 2.7% |
Experts say any reform conversation should weigh both the overall size of property-tax bills and how the burden is divided. A smaller overall bill can still leave lower-income households shouldering a disproportionate share unless measures explicitly address distribution.
What Texans should know before the hearing
House committee hearings set for mid-September will examine potential follow-ups to earlier relief measures. Lawmakers will confront difficult trade-offs: reducing property taxes often requires either cutting local services, increasing other statewide levies, or shifting the tax burden in new ways.
For homeowners and renters watching the debate, analysts recommend paying attention to:
- Whether proposals target relief by income or by property value;
- How changes would affect local school and municipal budgets;
- Whether any plan includes protections for fixed-income or long-term residents.
Gov. Abbott’s office did not immediately respond to a request for comment about the ITEP findings and how they factor into his policy proposals.
As the Legislature considers next steps, the central question for many Texans will be not only how large a reduction in property-tax bills lawmakers can deliver, but who benefits most from any change.
