Texas Tax Exemptions Complete Guide – Texas provides numerous tax exemptions that help homeowners, businesses, nonprofits, and residents save money on property taxes, sales taxes, and franchise taxes. As the second-largest state economy with no state income tax, Texas relies on these targeted exemptions to support families, veterans, seniors, and economic growth. This SEO-optimized guide explains the major Texas tax exemptions available in 2026, eligibility requirements, application processes, and recent updates—drawing directly from official Texas Comptroller of Public Accounts resources. Whether you’re a new Texas resident, homeowner, small business owner, or nonprofit leader, understanding these exemptions can lower your tax bill significantly.
What Are Texas Tax Exemptions and Who Benefits?
Texas tax exemptions reduce or eliminate liability for specific state and local taxes on qualifying property, purchases, or business activities. Property taxes are administered locally (no state property tax exists), while sales and franchise taxes are state-level. Exemptions target key groups: homeowners (especially seniors, disabled individuals, and veterans), businesses (through resale or manufacturing rules), nonprofits, and certain organizations.
In 2026, recent voter-approved changes have expanded many exemptions, particularly for property taxes, delivering record relief amid rising home values. Always verify with your local appraisal district or the Comptroller’s office, as rules are applied case-by-case and local taxing units may offer additional options.
Property Tax Exemptions: The Biggest Savings for Texas Homeowners
Property tax exemptions represent the most impactful relief for Texas residents, reducing the taxable value of homes and other property. Local appraisal districts handle applications, and most must be filed by May 1 (with some late-filing options up to two or five years for specific exemptions). Once approved, many exemptions remain in place until you sell, move, or no longer qualify.
Residence Homestead Exemption
The general residence homestead exemption applies to your primary home (principal residence you own and occupy by January 1). It reduces the taxable value for school district taxes by $140,000 (mandatory statewide). Many cities, counties, and special districts offer additional local-option homestead exemptions—up to 20% of appraised value (minimum $5,000) or a flat $3,000 for certain county taxes.
Eligibility: You must own the home, use it as your principal residence, and hold a Texas driver’s license or ID matching the address. Heir property owners can qualify with proper affidavits.
Savings example: On a $400,000 home, the $140,000 school exemption alone can save hundreds or thousands annually depending on local tax rates.
How to apply: Submit Form 50-114 to your county appraisal district. No reapplication needed unless requested.
Age 65 or Older and Disabled Persons Exemption
Homeowners age 65+ or disabled (per Social Security Administration standards) receive an additional $60,000 exemption on school district taxes (mandatory), plus local-option amounts (minimum $3,000). Those who qualify for both age and disability can stack them in the same year from different taxing units. Surviving spouses age 55+ may continue the benefit under certain conditions.
Disabled Veteran and Surviving Spouse Exemptions
- Partial exemption (Tax Code §11.22): Based on your VA disability rating—applies to any one property you own.
- 100% disabled veterans (§11.131): Full (total) exemption on your residence homestead.
- Donated homesteads (§11.132): Partial exemption for homes donated by charities.
- Surviving spouses of veterans killed in duty, first responders (§11.133–11.134), or those who died from qualifying conditions (§11.136): Total homestead exemption (unremarried spouse must maintain the home as principal residence).
Application: Use Form 50-114 or Form 50-135; provide VA documentation. Late filing is allowed in many cases.
Other property exemptions include solar/wind energy devices (Form 50-123) and those for charitable organizations or public property—detailed in the Comptroller’s Texas Property Tax Exemptions PDF.
Sales and Use Tax Exemptions: Tax-Free Purchases in Texas
Texas imposes a 6.25% state sales and use tax on most retail goods and services (local taxes may add more). However, broad exemptions apply to everyday items and specific buyers:
- Groceries and food for home consumption (not prepared food).
- Prescription medicines and certain health items.
- Agricultural inputs, manufacturing machinery, and resale items (businesses use resale certificates).
Sales Tax Holidays in 2026 (no exemption certificate needed):
- Clothing, footwear, backpacks, and school supplies: August 7–9.
- Emergency preparation supplies: April 25–27 and May 23–25 (Memorial Day).
- Water-efficient products: May 23–25.
For Organizations and Businesses: Qualified nonprofits, governments, and certain entities claim exemptions on purchases necessary for their exempt purpose using Form 01-339 (Texas Sales and Use Tax Resale Certificate/Exemption Certification). Manufacturers and resellers also qualify.
Note: No general sales tax exemption exists for 100% disabled veterans under current law.
Franchise Tax Exemptions: Relief for Texas Businesses
The Texas franchise tax (also called margin tax) applies to most LLCs, corporations, and other entities doing business in Texas. In 2026:
- No-tax-due threshold: $2,650,000 in annualized total revenue. Businesses below this owe $0 tax (though they must still file a Public Information Report or Ownership Information Report).
- Rates above the threshold: 0.375% (retail/wholesale) or 0.75% (all others).
New veteran-owned businesses may qualify for additional relief in their first five years.
Certain entities are fully exempt from franchise tax reporting if they obtain Comptroller approval (e.g., specific nonprofits).
Tax Exemptions for Nonprofit and Qualified Organizations
Nonprofits and specific organizations can receive exemptions from sales tax (on purchases), franchise tax, and hotel occupancy tax by applying to the Comptroller. Exemptions depend on IRS 501(c) status and Texas-specific rules.
Eligible Organization Types (examples):
- Charitable (§ AP-205)
- Educational (§ AP-207)
- Religious (§ AP-209)
- Federal and others (§ AP-204)
- Homeowners’ associations (§ AP-206)
- Chambers of commerce, development corporations, credit unions, and more.
Search the Comptroller’s exempt organization database to check status. Approved organizations use the exemption for purchases tied to their mission but generally collect sales tax on their own sales.
Property tax exemptions are also available for qualifying nonprofits—apply directly with local appraisal districts.
How to Apply for Texas Tax Exemptions: Step-by-Step
- Property Tax: Contact your local county appraisal district (find yours via the Comptroller’s directory). Submit the appropriate Form 50-114 series. Deadlines are generally May 1; some allow late filing.
- Sales/Use Tax Certificates: Use Form 01-339 for qualifying purchases (no pre-approval needed for many business exemptions).
- Organization Exemptions: File AP-204, AP-205, etc., with the Comptroller’s office plus supporting documents (IRS determination letter, formation docs).
- Franchise Tax: No separate application for the no-tax-due threshold—it’s automatic based on revenue. Nonprofits apply via AP forms for full exemption.
Keep records: Exemptions can be audited. Always use official Comptroller forms.
Recent 2026 Updates and Key Changes
- Homestead school exemption increased to $140,000.
- Age 65+/disabled school exemption increased to $60,000 (stackable).
- Franchise no-tax-due threshold at $2,650,000.
- Expanded sales tax holidays and continued focus on energy-efficient and emergency prep items.
These changes stem from voter-approved measures providing historic tax relief.
Frequently Asked Questions About Texas Tax Exemptions
Do I need to reapply every year?
Most property exemptions are one-time (until circumstances change). Franchise and sales exemptions for organizations require initial approval.
Can exemptions be backdated?
Yes—some property exemptions allow filing up to two or five years late.
Are there exemptions for out-of-state residents or businesses?
Limited; most require Texas residency, ownership, or nexus. Non-Texas entities may qualify for specific organizational or business exemptions.
Where can I find the latest forms and publications?
Visit comptroller.texas.gov/taxes/property-tax/exemptions or comptroller.texas.gov/taxes/exempt.
Final Tips and Next Steps for Claiming Texas Tax Exemptions
Texas tax exemptions offer powerful tools to reduce your burden—potentially saving thousands on your home, business operations, or nonprofit activities. Review your situation against the official Comptroller guidelines, consult your local appraisal district or a tax professional, and file promptly. For the most current details, bookmark the Texas Comptroller’s tax pages, as rules can evolve with legislation.
Start today: Check your eligibility, gather documents, and apply. Lower taxes mean more resources for what matters most to Texas families and businesses. For personalized advice, contact your county appraisal district or visit the official Texas Comptroller of Public Accounts website.