TRE Info Series: #3

The cost of housing may be the largest component of the affordability equation, but other goods and services also affect what it costs to live in this city. Property taxes don’t just impact the cost of owning a home; they also impact the cost of running a business.  

How Will the Tax Rate Election Impact Businesses?

Most Prop Q impact statements focus on the “typical” or “average” taxpayer, meaning residents who receive a 20% homestead exemption. While they may qualify for other exemptions, businesses and commercial properties don’t receive a 20% homestead exemption.  

By the Numbers

Austin’s proposed tax increase will impose an additional $96 per $100,000 in value on business and commercial properties. That may seem like a small number, but many commercial properties have valuations in the millions.  

You can look up your favorite business to see how Prop Q will affect its tax bill.  

• For example, a specific grocery store on the Appraisal District’s tax rolls shows a property valuation of $29.6 million. If Prop Q passes, this grocery store will pay almost $15,000 more in property taxes than if it fails.

No business can absorb that level of increase without passing costs on to their customers; especially when these tax and fee increases seem to occur year after year. You can read more about Austin’s recent tax and fee history here.

Ripple Effects on Employees and Vendors

In addition to the business’s direct tax burden, each of its Austin-based employees, regardless of whether they own or rent, will face higher taxes and fees. Their property taxes and rents will increase, as will their electric bills, water bills, bus fares, and more. These cost pressures will also apply to the vendors and suppliers. 

In short, Prop Q will force every business in Austin to face an increased cost burden, causing price increases on everyday goods and amplifying the city budget’s negative impacts on affordability.  

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