What Is the Property Tax Rate in Texas?
Introduction
Property taxes play a critical role in funding essential local services across Texas, including public education, road maintenance, emergency services, and law enforcement. Unlike some other states, Texas does not levy a state property tax. Instead, property taxes are imposed by local taxing units, such as counties, cities, school districts, and special districts.
For homeowners, prospective buyers, and real estate investors, understanding how property taxes work in Texas is essential for financial planning, budgeting, and long-term investment strategies.
Understanding Property Tax Rates in Texas
As of recent data, Texas has an average effective property tax rate of approximately 1.47%, which is higher than the national average of about 0.99%. This places Texas among the top states for property tax burdens, despite its lack of an income tax.
Variations Across Counties
Property tax rates in Texas vary widely by location, driven by the needs and decisions of local governments and taxing entities. For example:
A property in a major urban area like Houston may be subject to additional taxes from multiple local entities.
In rural counties, rates may be lower, but fewer exemptions or services may be available.
Local tax rates are determined annually based on budgetary requirements of each taxing unit, which then combine to create a total tax rate for a given property.
How to Calculate Property Tax in Texas
The basic formula for determining your annual property tax bill in Texas is:
Assessed Property Value × Total Local Tax Rate = Annual Property Tax Liability
The assessed value is determined by the County Appraisal District (CAD) based on the property's market value as of January 1 each year.
The total local tax rate is expressed as a percentage and includes all applicable taxing entities.
Example Calculation
Imagine a home with an assessed value of $300,000 in a location with a combined local tax rate of 2.2%: $300,000 × 0.022 = $6,600 in annual property taxes
This figure can change annually depending on changes in the assessed value or local tax rates.
Counties with the Highest Property Taxes in Texas
Some Texas counties and cities have notably higher property tax rates. For instance:
Pearland (Brazoria County) has a combined property tax rate of around 2.16%.
Parts of Harris County (Houston area) also rank among the highest due to funding needs for infrastructure, schools, and public services.
These higher rates often correlate with growing populations and infrastructure development needs.
The 10 Percent Property Tax Rule in Texas
The "10 Percent Rule" in Texas refers to the limit on how much a homestead property's appraised value can increase annually. Specifically, the assessed value for taxation purposes cannot rise more than 10% per year, regardless of how much the market value appreciates.
This rule provides a layer of protection for homeowners in rapidly appreciating markets, helping to stabilize tax bills and prevent sudden, unmanageable increases.
Strategies to Avoid High Property Taxes in Texas
Homeowners may qualify for a general homestead exemption, which removes a portion of a property’s value from taxation. For example, the state of Texas mandates a $100,000 school tax exemption for all homesteads, beginning in 2023.
Other Exemptions
Additional exemptions are available for:
Seniors (age 65+)
Disabled individuals
Veterans and their surviving spouses
These can significantly reduce the taxable value or even eliminate property taxes in certain cases.
Each year, homeowners can appeal their property valuation through their local County Appraisal District. If successful, this process can lead to a lower assessed value and a corresponding reduction in taxes.
Who Is Exempt from Paying Property Taxes in Texas?
The Texas Tax Code provides full or partial property tax exemptions for qualifying individuals and organizations. These include:
Disabled Veterans: Veterans with a 100% disability rating may receive a total exemption.
Senior Citizens: Homeowners 65 and older can qualify for an additional school tax exemption and may defer taxes until the property is sold.
Non-Profits and Charitable Organizations: Properties used exclusively for charitable purposes may be entirely exempt.
Application Process
To apply for exemptions:
Contact your County Appraisal District.
Submit the appropriate application form by the stated deadline (typically April 30).
Provide supporting documentation, such as age, disability, or veteran status.
Conclusion
Texas property taxes are complex and variable, shaped by local governments rather than the state. While the average rate is around 1.47%, actual costs can differ greatly depending on the property's location, value, and eligibility for exemptions.
Reach out to Dimov Partners today for expert guidance on Texas property taxes. Contact us now to simplify the process and maximize your savings.
FAQs
How do I calculate property tax in Texas?
Use the formula: Assessed Value × Local Tax Rate. Check your County Appraisal District for the most accurate figures.
Which county in Texas has the highest property taxes?
Counties in the Houston area, such as Brazoria (Pearland), and Harris often have among the highest rates.
What is the 10 percent property tax rule in Texas?
It caps annual increases in the appraised value of homesteads to no more than 10%.
How can I avoid high property taxes in Texas?
Apply for homestead and other applicable exemptions, and protest your property valuation if it seems too high.
Who is exempt from paying property taxes in Texas?
Eligible groups include disabled veterans, seniors (65+), and certain non-profit organizations.