Sugar Land approves targeted tax cuts for homeowners
Sugar Land City Council took the first step to approve targeted tax cuts for homeowners on June 21 by voting to increase the homestead exemption from 8 to 10 percent, effective with 2016 values.
The decision, based on a recommendation by Director of Finance Jennifer Brown, reduces the taxable value of homesteads by 2 percent, lowering tax bills and addressing increases in property values.
Since the city cannot control residential values, it must rely on tools available to manage growth in tax bills. The city’s recently re-adopted Financial Management Policy Statements target a goal of no more than a 3 percent average annual increase in residential tax bills unless a general obligation bond election is approved by the voters. The city has exceeded that goal during the past 10 years, and in the last five years, the average annual increase has been 2.8 percent even with a general obligation bond tax increase.
The homestead exemption targets tax cuts directly to homeowners, resulting in a higher savings to residents compared to a decrease to the city’s tax rate. Since 2007, homestead exemptions targeting tax cuts for homeowners have been raised from 1 percent to 10 percent – the equivalent of 3 cents on the city’s tax rate, which is already the second lowest in the state for similar sized cities.
Brown noted “adjusting the homestead exemption for 2016 is the best way to target tax cuts for homeowners, as it reduces the taxable value of a home and reduces property taxes on that value.”