6 Texas Homestead Exemption Rules That Change the Year an Owner Turns 65

Turning 65 in Texas can come with a break on your property taxes.

Some of it needs a form, and the timing around that birthday can surprise homeowners.

Here’s what changes for Texans, and what to do about it, when your big birthday comes.

Note: This is general information, not legal or tax advice. Assessment rules and exemption amounts are subject to change, so confirm the current details with your county appraisal district.

1. School Tax Ceiling

Once you qualify for the over-65 homestead exemption, your home gets a school tax ceiling.

Under it, your school district generally can’t raise the total tax on your home above what it charged in the first year you qualified.

Say that first-year bill is $3,000, and your district generally can’t bill you more than that in later years, even when your home’s value and the tax rate rise.

Timing matters because the first year you qualify sets the ceiling, which can be the year you turn 65.

2. Extra School Exemption

The over-65 homestead exemption adds an extra $60,000 exemption from the value your school district can tax.

At a 1 percent school tax rate, $60,000 in exempt value trims $600 from your school bill each year.

The extra amount sits on top of the standard school exemption every homestead owner gets.

3. Full-Year Exemption

In the year you turn 65, the over-65 homestead exemption covers the whole tax year, even when your birthday lands in December.

Under the general rule in Tax Code Section 11.42, an exemption is judged by your qualifications on January 1 of the tax year.

The over-65 exemption works differently: Section 11.42(c) makes it effective as of January 1 of the year you qualify and applies it to the entire tax year.

So a 65th birthday on Dec. 28 earns the same full-year exemption as a Jan. 2 birthday does.

4. Automatic Exemption

Under Tax Code Section 11.43, the over-65 homestead exemption can start without a form if you already get a homestead exemption on the home.

The chief appraiser at your appraisal district must add it when your age is on file.

Section 11.43(m) lets the district show your age through district records or through information the Texas Department of Public Safety sends it.

5. Optional Local Exemptions

Your county, city or another taxing unit may also offer an over-65 homestead exemption, but only when that unit adopts it.

A unit adopts it either by a vote of its governing body or by a favorable vote of a majority of its voters.

Unless the unit picks a larger figure, the amount is $3,000 of appraised value under Section 11.13.

Because each taxing unit that offers one makes that call separately, your savings can differ from a friend’s in the next county.

6. Portable Ceiling

When you move, the school tax ceiling from the over-65 homestead exemption can transfer to your new home.

Under Section 11.26(g), that works when you qualify the new home for the same exemption.

Your new ceiling starts with the first-year school tax the new home would have owed without any ceiling.

The district then multiplies that figure by a fraction.

The fraction compares what your old home’s school tax was in your last year there with what it would have been without the ceiling.

Picture an old home that owed $3,000 but would have owed $4,000 without the ceiling, which makes the fraction three-fourths.

If your new home’s first-year school tax would be $6,000 without a ceiling, your new ceiling is $4,500.

Deferrals and Installments

Beyond the over-65 homestead exemption, owners 65 or older can also defer their homestead taxes, which puts off paying the bill instead of trimming it.

Under Section 33.06, you file an affidavit with the chief appraiser at your appraisal district to start a deferral.

The tax doesn’t disappear.

A tax lien stays on the home, and deferred taxes accrue interest at 5 percent a year.

Without either option, the usual payment deadline is Jan. 31.

Owners 65 or older who qualify for the exemption can also split the bill into four equal installments without penalty or interest, unlike a deferral, which adds interest.

Under Tax Code Section 31.031, you pay the first installment and give notice of your plan before the delinquency date.

With the usual February 1 delinquency date, the other three payments come due before April 1, June 1 and August 1.

If you skip a payment, the unpaid installment becomes delinquent, with a penalty plus interest.

Improvements and the Ceiling

The school tax ceiling that comes with the over-65 homestead exemption can lift when you add improvements.

Under Section 11.26(b), if you add improvements, your school district can raise the tax in the first year they add value on the appraisal roll.

That same subsection excludes repairs and work the government requires from those improvements.

Under Section 11.261, counties, cities and junior college districts can adopt the same kind of limit on a homestead’s tax, but only if they choose to.

Section 11.261 applies only to units that have adopted such a limit, so elsewhere the ceiling covers school taxes only.

Surviving Spouses at 55

If your spouse had the over-65 homestead exemption, Section 11.26(i) lets you keep their school tax ceiling after they die.

You qualify if you're 55 or older when your spouse dies and the home stays your residence homestead.

So if you're 58 when your spouse dies, you keep the ceiling.