Texas Tax Exemptions

Texas offers a wide range of tax exemptions that can reduce or even eliminate property taxes, sales taxes, and certain business taxes for qualifying individuals, organizations, and businesses.

These exemptions are legal provisions designed to provide relief to homeowners, seniors, veterans, farmers, nonprofits, and businesses.

This expanded, reader-friendly guide explains the key Texas tax exemptions, who qualifies, how to apply, and why electronic filing can make the process easier.

What Are Texas Tax Exemptions?

Texas tax exemptions reduce the taxable value of property, remove certain purchases from sales tax, or exclude specific business assets from taxation.

Most exemptions require an application and are administered locally through county appraisal districts or at the state level through the Texas Comptroller of Public Accounts.

Homestead Exemption in Texas

The Texas homestead exemption applies to your primary residence and is one of the most valuable tax benefits available to homeowners.

Key benefits include:

• A $100,000 exemption from school district property taxes
• An additional $10,000 exemption for homeowners who are age 65 or older or disabled
• Potential additional exemptions from counties, cities, or special districts

Example: A homeowner with a house valued at $320,000 applies the $100,000 school tax homestead exemption. School taxes are calculated on $220,000 instead of the full value.

Tip: You must apply for the homestead exemption with your local county appraisal district—it’s not automatic.

Over-65 and Disabled Homeowner Exemption

Texas provides extra protection for homeowners who are age 65 or older or who are disabled.

In addition to added exemption amounts, this benefit includes a school tax ceiling, also called a tax freeze.

Once the tax ceiling is set:

• School district taxes cannot increase above that amount
• The freeze remains in place for as long as you qualify

Example: A homeowner turns 65 and pays $2,400 in school taxes that year. Even if property values rise, $2,400 becomes the maximum school tax they will pay going forward.

Tip: Apply as soon as you qualify—delaying can result in higher permanent tax ceilings.

Disabled Veteran Property Tax Exemptions

Texas offers strong property tax relief for disabled veterans and certain surviving spouses.

Exemptions are based on disability rating:

• 10%–29% disability: partial exemption
• 30%–49% disability: larger partial exemption
• 50%–69% disability: increased exemption
• 70%–100% disability: substantial exemption
• 100% disabled or unemployable: full exemption from property taxes on the primary residence

Surviving spouses of qualifying disabled veterans may also retain the exemption.

Example: A veteran rated 100% disabled owns a primary residence in Texas. All property taxes on that home are fully exempt.

Tip: Disability documentation from the VA is required, and exemptions must be filed with the county appraisal district.

Agricultural and Open-Space Land Exemption

Texas allows qualifying land to be taxed based on productive agricultural value rather than market value.

This applies to land used for:

• Farming
• Ranching
• Timber production
• Wildlife management

Because market values are often much higher than productive value, this exemption can dramatically reduce taxes.

Example: Land with a market value of $1 million may be taxed as if it were worth $150,000 based on agricultural productivity.

Tip: Improper use or sale of the land can trigger rollback taxes, so understand the rules before changing land use.

Sales Tax Exemptions in Texas

Texas also provides sales tax exemptions for certain purchases and organizations.

Common examples include:

• Purchases by qualified nonprofit organizations
• Manufacturing and resale exemptions
• Prescription medications and medical devices
• The annual August sales tax holiday for qualifying items under $100

Example: During the August tax-free weekend, a family buys $90 shoes and $95 backpacks and pays no state sales tax.

Tip: Retailers must apply tax-free status correctly—keep receipts showing exempt purchases.

Goods-in-Transit Exemption

The goods-in-transit exemption applies to certain business personal property temporarily stored in Texas before being shipped out of state.

This exemption benefits:

• Warehouses
• Distribution centers
• Logistics businesses

Example: Inventory stored in Texas for a short time before shipping to another state may be exempt from property taxes.

Application Requirements and Deadlines

Most Texas property tax exemptions require an application.

Important points to know:

• Applications are filed with the local county appraisal district
• The general deadline is before May 1
• Some exemptions allow late filing with limitations
• Sales tax exemptions may require permits through the Texas Comptroller

Example: A homeowner who buys a house in March should file for the homestead exemption before May 1 to receive the benefit that year.

Tip: Filing early helps avoid delays and ensures exemptions are applied to the correct tax year.

Surviving Spouse Benefits

Certain Texas tax exemptions transfer to surviving spouses, including:

• 100% disabled veteran exemptions
• Exemptions for first responders killed in the line of duty

The surviving spouse must typically:

• Remain unmarried
• Continue using the property as a primary residence

Example: A surviving spouse of a 100% disabled veteran continues receiving the full property tax exemption after the veteran’s death.

Practical Recommendation: Apply and File Electronically 💻

Whenever possible, use electronic filing and submission.

Electronic options can:

• Speed up approval
• Reduce paperwork errors
• Provide confirmation of receipt
• Make document uploads easier

Tip: Many county appraisal districts allow online exemption applications, and sales tax exemptions can often be managed through the Texas Comptroller’s website.

Final Thoughts

Texas tax exemptions can provide significant savings for homeowners, seniors, veterans, farmers, and businesses—but only if you apply correctly and on time.

Understanding which exemptions you qualify for and using electronic filing tools can help ensure you receive every benefit available.