What exactly is a homestead exemption? A homestead exemption removes part of your home's value from taxation, so they lower your taxes. You may apply for homestead exemptions on your principal residence.
For example, your home is appraised at $100,000, and you qualify for a $15,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it was worth only $85,000. Taxing units have the option to offer a separate exemption of up to 20 percent of the total value.
For more information regarding homestead and other exemptions, please visit the state comptrollers website: http://www.window.state.tx.us/taxinfo/proptax/exmptns.html