Property Tax in Texas: What Homeowners Need to Know

If you’re planning to buy a home in Texas, understanding property taxes is key since they can have a big impact on your budget. In the U.S., property taxes are set by local governments, and each state has its own rules on how these taxes are applied. Texas relies heavily on property taxes to fund things like schools and roads, so it’s essential to know how they work, what exemptions you might qualify for, and strategies to help you manage your tax bill.

Purpose of Property Tax in Texas

Property taxes are a crucial source of revenue for local governments in Texas, funding public services like schools, roads, police, and fire departments. Unlike many other states, Texas does not have a state property tax; instead, local taxing units such as counties, cities, and school districts assess and collect property taxes.

How Property Taxes Are Calculated in Texas

Property taxes in Texas are calculated based on the property’s assessed value, the tax rate (also known as the mill rate), and any applicable exemptions. Here’s a breakdown:

• Assessed Value: The local County Appraisal District (CAD) determines your property's market value each year.
• Ad Valorem Tax: Texas uses an ad valorem tax system, meaning taxes are based on the value of the property.
• Mill Rate: A mill rate is the amount of tax payable per $1,000 of the assessed property value. It varies by location and is set by local taxing entities.

Exemptions Available in Texas

There are several ways to cut down on your property tax bill in Texas:

• Homestead Exemption: This is the most common and reduces the taxable value of your primary home by $25,000 for school district taxes.
• Age 65 or Older Exemption: If you're 65 or older, you can get an extra $10,000 off your home’s value.
• Disabled Person Exemption: Homeowners with disabilities can qualify for additional reductions.
• Veterans Exemption: Veterans can get exemptions based on their disability rating. Those who are 100% disabled or killed in action, including their spouses, might get a full exemption.

💡 Continue reading: Understanding Property Tax Exemptions in Texas: Are You Eligible?

Factors That Affect Property Taxes

• Market Value: If home values in your area go up, your property tax bill likely will too.
• Local Tax Rates: These are set by your local taxing authorities like school districts and counties, and they vary by location.
• Property Location: Different cities and counties have different tax rates based on their budgets and needs.
• Property Improvements: Adding a new room or renovating your kitchen? These upgrades can increase your home’s value—and your taxes.

Appeal Your Assessment

If you think your home’s assessed value is too high, you can challenge it:

1. Review the Assessment Notice: Check for errors like incorrect square footage or outdated info.
2. Collect Evidence: Gather recent sales data of similar homes, photos of damage, or anything that proves your home is overvalued.
3. File a Notice of Protest: Submit your appeal to your local County Appraisal District (CAD) by May 15 or within 30 days of receiving your assessment.

Taking these steps could save you a lot on property taxes each year!

💡Continue reading: Save Big on Property Taxes: Texas Property Tax Assessment Appeal Guide.

Cities with the Highest Property Taxes in Texas

Cities like Austin, Dallas, and Houston often have higher property tax rates due to increased property values and local government needs. However, tax rates can vary significantly even within cities based on school districts and other local factors.

Tricks for Lowering Your Property Tax Bill

1. File for Exemptions: Ensure you claim all applicable exemptions to reduce your taxable value.
2. Maintain Your Home: Correct any errors on your property assessment, like overestimated square footage.
3. Protest Your Assessment: Regularly check your assessment and protest when you find discrepancies.

Property Tax in Texas: Top 10 Property Tax by County 

1. Property Tax in Harris County 
2. Property Tax in Dallas County  
3. Property Tax in Tarrant County (Fort Worth)
4. Property Tax in Bexar County (San Antonio)
5. Property Tax in Travis County (Austin)
6. Property Tax in Collin County (Plano)
7. Property Tax in Denton County (part of the DFW metroplex)
8. Property Tax in El Paso County (El Paso)
9. Property Tax in Fort Bend County (suburb of Houston)
10. Property Tax in Montgomery County (north of Houston)

How to Pay Your Property Tax Bill

Property tax bills are usually mailed by the end of October, and payment is due by January 31 of the following year. You can pay:

• Online through your county’s website.
• In Person at your local tax office.
• Via Mail using checks or money orders.

Property Tax Deductions

While property tax payments are a financial burden, they are often deductible on your federal income tax return, which can provide some relief.

Special Assessment Tax

Special assessments are taxes imposed on properties that benefit from specific local improvements, such as new sidewalks or sewer lines. These are usually additional to your regular property taxes.

Taking Advantage of Property Tax Abatement Programs

Tax abatement programs can temporarily reduce or eliminate property taxes on new improvements. Typically used to incentivize development, these programs can be beneficial if you’re planning substantial renovations or new construction.

Conclusion

Understanding property taxes in Texas is crucial for managing your finances as a homeowner. By learning how taxes are calculated, exploring available exemptions, and knowing how to appeal your assessment, you can take control of your property tax bill. Use these strategies to ensure you're not overpaying, and consider reaching out to professionals if you need extra help navigating the process. With the right knowledge and proactive steps, you can keep your property taxes in check and save money each year!

Ready to reduce your property tax burden? Sign up with Abode today for expert guidance on managing your property taxes and maximizing your savings!

FAQs

What is the property tax rate in Texas?

The average property tax rate in Texas is about 1.80%, though rates can vary depending on the county and local taxing authorities.

How much are property taxes on a $200,000 house in Texas?

Property taxes on a $200,000 house in Texas would be approximately $3,600 annually, based on the average rate of 1.80%.

Why is property tax in Texas so high?

Property taxes in Texas are high because the state relies heavily on them to fund public services like schools, roads, and emergency services, as Texas does not have a state income tax to generate revenue.