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Homestead Exemptions save you money on property taxes and provide protections. Have you filed yet?
Updated March 4, 2026.
If you currently own a home or are planning to buy one, it’s important that you understand the benefits of filing for your homestead exemption. Under Texas law, homeowners who file for homestead exemption are offered protections as well as tax benefits on their primary residences. So what exactly defines a homestead? A homestead can be a single family home, separate structure, condominium, or a mobile home located on leased land, as long as you own it AND occupy it as your primary residence. It can include up to 20 acres if the land is used as your yard.
What this is going to do is basically three things:
First, it’s going to provide protection from any creditor from forcing the sale of your homestead to satisfy non-payment of a debt. Now there are certain exceptions to this such as your mortgage holder, a taxing authority, or the holder of a note created for a home improvement loan.
Secondly, your homestead exemption provides for a reduction in the taxable value of your home; thereby reducing your total property tax liability. These valuation deductions can show up on any number of the individual taxing entities to which your property belongs, but the biggest benefit will show up on your school district taxes.
Senate Bill 4, passed in 2025, provided significant changes for Texas homeowners. First, it raised the homestead exemption for school taxes from $100,000 to $140,000 (meaning your $400,000 home will be taxed as if it were worth $260,000). Additionally, House Bill 8 increases school tax rate compression by $2.8 billion, a change expected to reduce school property taxes by about $270 per year, roughly 10 percent, for the owner of a typical $400,000 Texas home. Together these changes will save the average homeowner nearly $450 annually.
The increase is particularly significant when you remember that as recently as 2021, the homestead exemption in Texas was a mere $25,000. It was boosted to $40,000 in 2022, and then saw a huge jump to $100,000 in 2023. And just last year in 2025, Senate Bill 4 expanded it to $140,000.
As an example, for a typical home in Katy ISD, your school tax savings might look like this:
| Before Senate Bill 4 | After Senate Bill 4 | |
|---|---|---|
| CAD Appraised Value | $400,000 | $400,000 |
| Homestead Deduction | $100,000 | $140,000 |
| ISD Tax Rate | 1.1171% | 1.1171% |
| ISD Tax Value | $3,351 | $2,904 |
| Savings | – | $447.00 |
Keep in mind, this simple example represents only the school district portion of your tax bill and there will be other entities that impose a tax rate on your home. You SHOULD however investigate whether additional exemptions are available from the other taxing entities on your property. The City of Katy, for example, allows for a 20% exemption of the total home value if the home falls under its taxing jurisdiction. There are also additional exemptions that some homeowners may qualify for as well – Over 65, Disability, Agricultural, etc.
Last, your homestead exemption caps the annual increase on taxable value that an appraisal district can make on your home at 10% per year. So in short, the taxable value of your home can be no more than the preceding year’s appraised value + 10% even if the market value of your home exceeds that cap. It’s important to recognize the difference between market value and taxable value. Even though your taxable value is capped at 10% each year, the increase is based on the market value for the previous year, NOT the previous year’s taxable value. This is why it’s important to fight your assessment each year.
Here’s the great thing: you only have to file for your homestead exemption one time and it’ll carry over year after year. But filing is NOT automatic. Effective January 1, 2022, new home buyer’s may apply for the general residence homestead exemptions in the year they purchase the property for the applicable portion of that tax year. You no longer have to wait until January 1st of the following year.
Each county will have their own application, so be sure to use the correct form for your home. We’ve linked to the applications from the 6 Houston-area appraisal districts below.
Now one more thing: if you get letters in the mail telling you that they’ll file your homestead exemption for a fee, trash it. Filing your homestead application is free. And those letters, despite looking a lot like official documents, are from companies trying to make a buck off the backs of unsuspecting new homeowners. Typically, these letters will show up in your mailbox soon after you purchase your property.
