Federal guide · Taxes

Homestead exemption: how it works and how to claim it

A homestead exemption lowers the taxable value of your primary home. Texas exempts $140,000 of school-tax value; New York has none, only STAR.

Checked on against the official sources listed at the bottom of the page.

In short

A homestead exemption is a state or local rule that removes part of your primary home’s value from property tax. Amounts and rules are set state by state. In Payotte’s table of official sources (extracted October 14, 2026), Texas exempts $140,000 of appraised value from school district tax, Florida $25,000 plus $26,411 on non-school taxes (2026), California $7,000, and Alabama up to $4,000 of assessed value. New York has no homestead exemption as such. In the states listed, you must apply.

The principle

Property tax is charged on a taxable value multiplied by a rate. A homestead exemption subtracts a fixed amount (or a percentage) from the taxable value of the home where you live. In the states read, it does not apply to a rental or vacation home (California says so explicitly). The saving is the exempt amount times the combined tax rate, so it is small in some states and large in others.

Three features recur in the state rules read by Payotte:

  • Owner-occupied primary residence. You must own the home and live in it as your main home, usually as of a set date, such as January 1 in Florida and California or October 1 in Honolulu.
  • A filing step. In the states listed here, the exemption is not automatic. You file with the county or city assessor, and some require a one-time filing.
  • Extra relief for seniors or disabled owners. Several states add a larger exemption at age 65, or for disability or blindness.

Many states also pair the exemption with a cap on yearly increases of the assessed value. That is a separate rule, covered in the state tables.

Examples from the official sources

StateWhat the exemption doesWho and when
TexasSchool districts must exempt $140,000 of appraised value from the 2025 tax year, plus $60,000 more for owners 65 or older or disabled (Tax Code 11.13)Apply once on Form 50-114 with the appraisal district before May 1
Florida$25,000 off all taxes, plus $26,411 off non-school taxes on value above $50,000, in 2026Permanent residence on January 1; file by March 1
Hawaii (Honolulu)$120,000 of assessed value for owners under 65, $160,000 at 65 or older, for 2026-27Principal home on October 1; file by September 30 before the tax year
California$7,000 reduction in taxable value, about $70 a year at a 1% ratePrincipal residence on January 1; Form BOE-266 once, by February 15 for the full amount
AlabamaState homestead up to $4,000 and county homestead up to $2,000 of assessed value, capped at $4,000 on one levyOwner-occupied; owners 65 or older are exempt from state property tax
New YorkNo homestead exemption; STAR lowers school taxesRegister with the Tax Department; income limits apply

Those amounts are in the state tables Payotte extracted from each state’s own pages. Florida also has a proposal, CS/HJR 1F, on the November 3, 2026 ballot to raise the non-school exemption in 2027 and 2028 if 60% of voters approve. Amounts change with legislation and indexing, so read the state page before relying on any figure.

A worked example

Take a California home taxed at a 1% rate. A $7,000 reduction in taxable value lowers the bill by $7,000 times 1%, which is $70 a year, as the California State Board of Equalization states. In Texas, a $140,000 school exemption on a home taxed at, say, a 1% school rate would save $1,400. That second rate is only an illustration of the arithmetic; your school district’s rate is on your tax statement.

How to claim it

  1. Confirm you qualify. Check ownership, occupancy and the date your state uses.
  2. Find the office. It is the county or city assessor, appraisal district or property appraiser.
  3. File on time. Deadlines range from the start of the year to the following fall. Late filing may cost part of the benefit: California still gives 80% if you file by December 10.
  4. Keep the proof. Some states want a deed, a driver’s license or a voter registration.
  5. Tell the office when you move or rent the home out. The exemption usually ends when the home stops being your primary residence.

In a purchase, the seller’s exemption does not carry over. You normally file your own application after closing. See home-buying steps and escrow accounts, since your lender may base escrow on a bill that included the seller’s exemption.

Where to look next

The 50-state comparison of how value is set, homestead amounts and caps is at /usa/by-state/property-tax. Your state’s page is /usa/{state}/property-tax, for example Texas, Florida or Alabama. If you think your value is too high, read how to appeal property taxes. The federal tax angle is in the property tax deduction guide.

Frequently asked questions

What is a homestead exemption?

It is a reduction in the taxable value of your primary residence, set by state or local law. It lowers your property tax bill and does not apply to rentals or second homes.

Is it automatic?

Usually not. In Texas, Florida, Hawaii and California you file with the local assessor. New York’s STAR also requires registration.

Do I lose it when I sell?

Yes, in the sense that it belongs to the owner. The buyer must apply for their own. In Texas the exemption stays until the home changes owners.

Is the homestead exemption the same as a cap on tax increases?

No. An exemption subtracts from value. A cap limits how fast the assessed value can rise, for example 10% a year in Texas on homesteads or 7% in Alabama (Payotte tables).

Where do I find my state’s amount?

On your state’s property tax page on Payotte, which links the statute or agency page. Confirm with your county assessor for the current year.

General information drawn from the official sources cited and dated on this page. It is not legal, tax or financial advice: for your own situation, ask a licensed professional.

More taxes guides

Sources

All federal guides · All states