Why is property tax so high in Austin?
High property taxes in Austin are a reality every homeowner has to deal with. Taxes in Austin equate to about 2.1% of the value of a property, which is exceptionally high even nationally. Knowing why property taxes are high can help homeowners plan budgets, and help reduce the load of taxes.
Texas Has No State Income Tax
One of the main reasons the property taxes in Austin are high is the absence of state income tax in Texas. Since Texas doesn’t have a state income tax, Texans get to keep more money in their wallets, but it also means that state funding falls on other county services. Public education, roads and transport systems, hospitals and emergency services, and funding gaps have to be filled by county property tax budgets.
Rapid Population Growth and Rising Home Values
In the past decade, Austin, Texas has become a thriving city that has attracted a considerable amount of interest, making real estate a safe bet. As the demand for real estate increases, so do the valuatons of properties, and consequently, the taxes on those properties. For example, a house that has been valued at $450,000, and the next year at $500,000, with the tax rate being the same, could increase significantly resulting in a tax increase of a couple hundred dollars.
Multiple Taxing Authorities
No single authority dictates what tax rate to set for property taxes, and Austin property tax rates are reflective of the City of Austin, Travis County, Austin ISD (School District), and some additional special districts. Collectively, these jurisdictions lead to an effective rate of about 2.1%, which is quite high considering the national average is 1%. Each Taxing Authority has planned to use the money collected from property tax to offer particular services to the community, which adds to the overall local tax burden.
Limited Exemptions and Local Budget Needs
An exemption system is in place, such as the homestead exemption and the senior relief, but it is an unfortunate reality that these do not capture the needs of all Austin homeowners. Furthermore, as a result of the budget growing local government needs, the tax bills continue to rise, even assuming the rates do not change.
There are no standard formulas for Austin property tax rates. A tax specialist can review your property tax assessment for potential exemptions and construct strategies to minimize your property tax liability. Get expert tax guidance to protect your investment and provide tax relief to your family year after year.