Inadvertent Harm From State Veterans Exceptions

Texas, which is home to somewhere between 1.4 million to 1.5 million veterans, has more veterans than any other state in the country. For decades, taking care of veterans has been at the core of the state’s ideology.

Having a disabled veterans property tax exemption seemed like a no-brainer. It could help relieve any Texas veteran of the property tax burden in honor of their service. However, for some places, the disabled veterans property tax exemption has done significant financial harm to very veteran-heavy cities in the state, due to a lack of proper reimbursement from the Texas legislature.  

In most cities, the veterans property tax exemption accounts for very little financial burden. But for cities like Killeen and El Paso, which are next to major military installations like Fort Hood, that burden can be extraordinary. 

The city manager for Killeen has reported during recent budget discussions at the Killeen City Council that the city has lost upwards of $100 million in property tax revenue since 2007. He emphasized that this exemption will be a problem for Killeen’s budget every single year.  

The city manager even wrote a letter to Gov. Greg Abbott last year which said, in short, every other house built in Killeen is tax free.

Since property taxes are one of the main ways cities like Killeen collect revenue, something that started out as a service for veterans has turned into an unintended financial drain. 

The state does provide some reimbursement for these exemptions, but not enough to make much of a difference and far less than what the cities asked for.

According to the state comptroller’s office, El Paso requested $11.5 million in 2026 and got back $1.4 million in reimbursement; Bell County requested $16 million and got back $1.9 million; Coryell County requested $2.9 million and got a little more than $339,000; and Killeen, which has likely been impacted the most due to its proximity to Fort Hood, requested more than $12 million and got back $1.4 million in reimbursement. 

Louie Minor, who is a Bell County Commissioner, said that the veterans property tax exemption continues to be an issue for the entities disproportionately impacted.

“As of this last year the exemption requests for the entire state was $78 million, but the state only paid $9.5 million,” Minor said. “But the exemptions keep growing.” Minor, who is a veteran himself, said that there was approximately $23 million in taxable value that the county could’ve collected, but didn’t.

“It means that their taxes are higher,” Minor explained. “The taxes are higher for individuals that cover that exemption … We still have liabilities to take care of that the state mandates. People expect good roads. People expect the jails and the courts … We still have to maintain those at an adequate level. We have to shift those to other taxpayers.

There was a concerted effort by cities in Bell County like Killeen to get a greater reimbursement for the disabled veterans exemption last year, but ultimately the Legislature increased the number of cities that were eligible without increasing the amount, meaning that Killeen got a smaller reimbursement than it otherwise would have.

“The Senate actually did include more money in their portion for the budget to increase the tax exemption but as far the reimbursement for cities and counties, my understanding is that was cut at conference when the House and Senate meet,” Minor said.

Minor also said there are a lot of state representatives that aren’t even aware of what these military adjacent cities are facing. “I was having dinner this week with a state representative that had no clue what I was talking about because he was from east Texas,” he said. “None of this affects them.”

He said that the solution may be for military-adjacent cities to band together as a cohort.

“I think we need to come together and work this issue together instead of separately because right now we've all been working on it separately,” Minor said. “We need to come together as a cohort and lobby together that this is not sustainable for any of us.”

Minor said that the state also bears some responsibility for the burden.

“We have to raise taxes to cover that loss, and it's a great benefit. I receive that benefit. I’m a disabled veteran but it definitely should be funded by the state,” he said, stating that this is especially true when the state is sitting on billions in its rainy-day fund, expected to reach a cap of $28  billion, according to the comptroller.

“What you need to understand is that that money is not lost,” Minor said. “We have to make it up. We’re increasing taxes on the rest of the taxpayers to cover that loss. We are making that money. $21 million that the county lost. We had to raise taxes on everyone else to recoup.” 

He said that if the state were to give them a reimbursement, Bell County could lower its tax rate by five cents.

With the next legislative session set to begin in January, this issue is bound to come up again. Several local politicians in Killeen have already pledged to go to the legislature to lobby for an increase in reimbursement.