As Texas homeowners prepare to see the state’s larger homestead exemption on their fall tax bills, Austin is moving to claw back part of that relief on the city’s side of the ledger. The $6.6 billion budget City Manager T.C. Broadnax proposed July 10 sets Austin’s property tax rate at the voter-approval maximum — the highest rate a city can adopt without triggering an election.
The proposal would raise the city rate to 57.953 cents per $100 of taxable value from about 52.4 cents, according to CBS Austin. Although Austin projects overall taxable values will fall from last year, the higher rate would generate about $1.278 billion in property tax revenue for operations, maintenance and debt service.
The city’s Taxpayer Impact Statement estimates that the owner of a median-valued, non-senior homestead would pay roughly $2,248 in city property taxes under the plan — about $177 more than this year. The budget also cuts about $5.1 million in grants to social-service providers while shifting funds to keep city-operated shelters open.
The timing sharpens a tension the state’s 2026 relief package was meant to ease. Under Senate Bill 4 and the voter-approved Proposition 13, the school-district homestead exemption rose to $140,000 from $100,000 for the 2026 tax year, with an added $60,000 break for homeowners who are over 65 or disabled. The Comptroller estimates the change saves the average homeowner about $560 a year in school taxes.
But that relief applies to the school portion of a tax bill; nothing stops a city, county or special district from raising its own rate, and Austin’s proposal shows how local rate-setting can offset state cuts. The maneuver is legal precisely because the city is using the voter-approval rate rather than exceeding it, which would force a November ratification election.
Austin’s move stands out against a year of state pressure to hold local taxes down. Attorney General Ken Paxton in May barred more than 130 mostly small cities from collecting more revenue than the prior year for failing financial-audit and transparency requirements, capping them at the no-new-revenue rate. Austin, a large city not among those flagged, is instead adopting the higher voter-approval rate — the ceiling the truth-in-taxation system permits without a public vote.
City officials defend the increase as a matter of arithmetic. Falling values shrink the base, costs for public safety and shelters keep rising, and the voter-approval rate is the tool available to fund additional services. Broadnax described the plan as focused on long-term financial stability, balancing the budget through reductions and reallocations while protecting priorities such as housing vouchers, firefighter overtime and police recruitment.
For homeowners, the net effect is what matters, and it cuts against the relief the Legislature advertised: a larger state exemption trimming the school line while the city rate climbs toward its cap. It is the dynamic The Texas Dispatch examined in its July analysis of Gov. Greg Abbott’s proposal to restructure the property tax system and its coverage of the more than $2.3 billion districts sent to the state in recapture — a reminder that relief delivered at the Capitol can leak away at city hall.
Austin’s council will spend the next several weeks reviewing the plan before adopting a final budget and tax rate in August, the point at which the proposed 57.953-cent rate becomes real for hundreds of thousands of taxpayers.