Austin Property Tax Exemption for Child Care Facilities

Dedicated Funding Streams

  • Property Tax

Expansion

  • Physical Space and Facilities

Austin, Texas

In November 2023, Texas voters approved Proposition 2, activating a constitutional amendment that allows counties or municipalities to authorize a property tax exemption on all or part of the appraised value of property used to operate child care facilities. Two days later, in a unanimous vote, the City Council made Austin the first city in Texas to authorize a 100% property tax exemption for eligible child care operators in the city, beginning in 2024. The Council also directed the city manager to identify similar relief options for home-based child care centers, which are not eligible for tax relief under the constitutional amendment. 

 The amendment specifies that the exemption for child care operators must equal at least 50% of the property’s appraised value. Advocates for the amendment aimed to alleviate some of the financial burden that Texas child care facilities face, allowing providers to put more money toward recruiting and retaining high-quality staff, maintaining physical spaces, and acquiring necessary supplies.

For a child care facility to be exempt, it must be both licensed and part of the Texas Rising Star Program, a quality rating and improvement system for child care programs that participate in the Texas Workforce Commission’s Child Care Services. At least 20% of the children enrolled in the facility’s child care program must receive subsidies or scholarships from the Texas Workforce Commission. Home-based child care facilities are not eligible. The amendment went into effect in January 2024. 

Sources:

KUT Radio, Austin’s NPR Station. (2023). Austin City Council gives some child care providers property tax relief.

Austin American-Statesman. (2023). Austin moves to grant tax breaks to child care centers after Texas voters approve Prop 2.

Ballotpedia. (2023). Texas Proposition 2, Property Tax Exemption for Child-Care Facilities Amendment.

Connections to Key Early Learning Study at Harvard (ELS@H) Findings:

High-quality, affordable early education and care supports children’s healthy development and allows families to work, engage in their own educational pursuits, and/or participate in other aspects of community life. To support children and families in these instrumental ways, research suggests there is a need to expand the availability of early education opportunities across the mixed-delivery system.

Findings from the Early Learning Study at Harvard (ELS@H) show:

  • Families rely on a range of formal (e.g., Head Start, center-based care, public pre-K) and more informal (e.g., home-based, relative care) early education settings; when choosing a setting for their child, families balance many logistical constraints and personal preferences.
  • But for many families – and especially low- and middle-income families – early education choices remain tightly constrained due to issues of affordability and supply.
Learn More about ELS@H Findings

Learn more about Austin

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  • The city population is 974,447
  • The percentage of children under age 5 is 5.50%
  • The median family income among households with children is $126,400