Texas Governor Greg Abbott Proposes Tightened Property Tax Appraisal Caps

Texas Governor Greg Abbott has proposed a plan to reduce property taxes by tightening limits on annual property value increases. The current Texas law caps taxable value growth on primary residences at 10% per year, a measure put in place in the 1990s to prevent steep tax bill increases amid rapid home value appreciation. Abbott’s proposal seeks to lower this cap to 3% and extend it to all types of properties, including commercial real estate and multifamily housing, in an effort to create predictability for taxpayers. This initiative is a central element of Abbott’s 2026 reelection campaign and includes additional measures such as eliminating school property taxes for homeowners and restricting local governments' authority to raise tax rates. However, tax policy experts from both conservative and liberal perspectives have criticized the proposal, arguing that appraisal caps do not address the root causes of rising tax bills and may result in significant unintended consequences. Analysts note that higher property values do not automatically translate to higher tax bills, as local taxing authorities can adjust tax rates to stabilize revenue. Instead, experts recommend focusing on reducing tax rates and local government spending to manage tax burdens more effectively. Abbott’s approach has drawn comparisons to California’s Proposition 13, which imposed strict property tax limitations in the 1970s but has been associated with market distortions such as reduced housing supply, inequities between longtime and new property owners, and increased housing costs. The appraisal cap can discourage existing homeowners from selling, limiting market availability and driving up prices. It also creates disparities where long-term owners pay far less in taxes compared to newer owners of similar properties. Evidence from Texas counties and other states suggests that capping appraisals can lead to compensatory increases in tax rates on properties that are not capped, potentially increasing overall tax burdens. The proposal also includes changing appraisal frequency from annual to once every five years, which could result in lagged adjustments to property values and tax liabilities. Alternatives to appraisal caps highlighted by experts include “circuit breaker” programs that limit property tax bills as a percentage of homeowner income, targeting relief to lower- and moderate-income families. While Texas has debated such programs, challenges include the state’s lack of an income tax for income verification. Abbott’s plan does not propose direct relief measures for renters, who constitute a significant portion of Texas households, and largely places reliance on property owners’ protections. The plan also omits strategies addressing increasing homeowners’ insurance costs and broader housing affordability issues, though bipartisan legislative efforts have recently aimed to ease housing shortages through regulatory reforms. Legislative hurdles remain for Abbott’s plan, particularly opposition from Texas Senate leadership and some business groups concerned about uneven impacts. The proposal’s effectiveness and adoption will depend on legislative negotiations and broader policy considerations within Texas’s tax and housing landscape.