The exemption is subtracted from appraised value before the rate is applied.
Printable cheat sheet
Texas homestead exemption cheat sheet
How the homestead exemption reduces taxable value, the savings at the rate per $100, and the 10% homestead appraisal cap. Built for homeowners and for the Texas exam taxes topic.
Savings = exemption / 100 x rate per $100 of value.
A homestead's appraised value cannot rise more than 10% per year, plus new improvements.
The exemption and the cap apply only to a qualified homestead, not rentals or land.
Each taxing unit can set its own homestead exemption amount.
Qualifying homeowners may receive additional exemptions on top of the general one.
How to calculate the savings
- Start with the appraised value from the appraisal district (after any 10% cap).
- Subtract the homestead exemption amount the question gives to get the taxable value.
- Divide the taxable value by 100, then multiply by the rate per $100 for the tax.
- Compute savings as the exemption divided by 100, times the rate per $100.
- For a year-over-year question, apply the 10% cap to last year's appraised value first.
Traps to check
- Do not treat the exemption as a dollar-for-dollar tax credit; it reduces taxable value.
- Do not divide by 1,000; Texas rates are stated per $100 of value.
- Do not confuse the homestead exemption with the 10% appraisal cap; they are separate.
- Do not apply the exemption or the 10% cap to a rental, second home, or raw land.
- Do not assume one fixed exemption amount; amounts vary by taxing unit.
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