The over-65 tax ceiling, also referred to as the homestead tax ceiling, is a property tax exemption available to homeowners in Texas who are age 65 or older. Unlike the regular homestead deduction, homeowners who reach the age of 65 can have their property tax liability frozen on the year they reach the eligibility age, as noted by the Powell Property Tax Reduction website.
Texas does not have an individual income tax, and the main source of funding for school districts comes from property taxes. The over-65 tax ceiling typically applies only to the school district in which the homeowner's property is located, and the residence must have been owned on the first day of the tax year. The home must also be a primary residence. The ceiling percentage amount can be transferred to another district if the homeowner moves, although the rules regarding a property-tax ceiling transfer can be complex.
Once an over-65 tax ceiling has been applied to a homeowner's property, it will remain in effect even if the market value of the property goes up, provided that the value increase was not the result of home improvements. Surviving spouses of an individual who qualified for the over-65 tax ceiling are also eligible, as long as they are at least 55 years old, as reported by FYP, a company providing information on property tax loans.