Texas Property Taxes Explained: Rates, Reliefs & Everything

Unlike many states, Texas does not impose a state income tax. So, local governments rely on property taxes to meet their budgets. They are a key part of the state's revenue system.

In 2025, property tax rates and assessments continue to evolve. This is due to fluctuations such as housing demand, economic trends, and new laws or policies. Market conditions and legislative changes influence them. This guide will clarify the exemptions, calculations, and property tax in Texas. It will help you navigate the property tax system.

Texas has one of the highest property tax rates in the US, at about 1.60%. However, this rate varies by county due to local tax policies and funding needs.

Here are some key points regarding Texas property tax rates:

• County Variations: Counties like Collin and Fort Bend have higher rates of 2.00% and 2.28%, respectively. Others, like Matagorda and San Augustine, have much lower rates around 0.71% and 0.79%.

• Median Home Values: The median home value also influences the overall tax burden. For instance, Collin County's median home value is about $475,000. This leads to higher property taxes than counties with lower values.

• Taxing Entities: Each county's tax rate is set by several entities. These include school districts, cities, and the counties themselves. Each entity sets its rate based on budgetary needs for the fiscal year.

In Texas, calculating property taxes is a multi-step process. It involves the property's assessed value, exemptions, and local tax rates. Here’s a breakdown:

1. Assessment of Property Value: The process begins with the local Central Appraisal District (CAD) assessing the market value of your property. This is based on comparable sales and current market conditions.

2. Determining Exemptions: You can claim various exemptions that reduce their taxable value. The most common is the Homestead Exemption, which provides up to $100,000 reduction for school taxes on primary residences.

3. Applying Tax Rates: Each taxing entity sets its rate per $100 of assessed value. For example, if your home is valued at $200,000 and the combined tax rate is 2%, your calculation would be:

• Tax Due = (Assessed Value − Exemptions) × Tax Rate/100

4. Total Tax Calculation: Each October, you may receive your property tax bill. It will detail the total amount due based on these calculations.

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Texas has several property tax reliefs to reduce homeowners' tax burden. These are the most common exemptions you can get in Texas:

• Homestead Exemption: You can get a $100,000 exemption from school taxes on your primary home. This exemption reduces the taxable value of the home. This means that if your home is worth $300,000, you're taxed as if it's worth $200,000. Additionally, local units may offer an extra exemption of up to 20% or $5,000 minimum.

• Age 65 or Older Exemption: Homeowners aged 65 or older can get extra exemptions. These reduce their taxable value further. For instance, they receive a $10,000 exemption from school taxes. This is on top of the general homestead exemption.

• Disabled Veteran Exemption: Disabled veterans may qualify for property tax exemptions based on their disability rating. For instance, a 100% disabled veteran might not have to pay property taxes on their home.

In Texas, property taxes are based on market value, or what a property would sell for today. Every year, the local Central Appraisal District (CAD) evaluates all taxable properties in the county. The CAD considers various factors to determine this value.

• Size and Location: Larger properties and those in desirable areas usually have higher values.

• Condition: Well-maintained homes are appraised at higher values compared to those needing repairs.

• Improvements: Renovations or additions can increase a property's assessed value.

Once the market value is set, applicable exemptions, such as the Homestead Exemption, are deducted to arrive at the taxable value. This taxable value is then multiplied by the local tax rate to determine the annual property tax bill.

Market conditions affect property values, which in turn affect tax assessments. Local tax rates set by authorities like counties and school districts also impact taxes.

Moreover, rapid population growth raises demand for services, leading to higher taxes. In addition, legislative changes, such as limits on assessed value increases, also influence taxes.

When homeowners fail to pay their property taxes by the January 31 deadline, they become delinquent starting February 1. This status triggers a series of penalties and fees that can escalate quickly:

• Immediate Penalties: A 7% penalty is applied to the unpaid amount immediately after the due date.

• Accruing Interest: Interest continues to accrue monthly, potentially reaching up to 47.6% depending on local regulations.

• Tax Liens: If your taxes are unpaid, the local government can place a lien on your property. This gives them legal rights to it until you pay the taxes. This can complicate selling or refinancing your property.

If delinquent taxes remain unpaid for an extended period, homeowners risk foreclosure. However, there are solutions available for those struggling with payments:

• Payment Plans: Many counties like Tarrant offer payment plans for those who can’t pay the full amount upfront. This can help reduce the financial burden over time.

• Tax Relief Programs: Some community organizations assist homeowners facing financial hardships.

• Protests and Appeals: Homeowners can protest if they believe their assessed value is too high. They should file a protest with their local appraisal district. Successfully challenging an assessment may lower future tax bills.

• Professional Assistance: Consulting experts in property taxes can help. They can guide you in managing delinquent accounts and finding relief options.

Note: To avoid foreclosure or losing your property, it is important to handle unpaid taxes ASAP.

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Property taxes are unavoidable if you're planning to buy or invest in property in Texas. However, you can significantly reduce your costs by saving on realtor fees with Realpha's commission-free homebuying platform. Typically, homebuyers in Texas pay around 5.76% of the home's sale price in commissions. By choosing Realpha's platform, you can eliminate this expense. Here’s how:

In these scenarios, the savings from avoiding traditional realtor commissions could cover approximately 3.2 years of property taxes, based on an average property tax rate of 1.60% in Texas.

By utilizing Realpha's platform, you not only save on realtor fees but also gain the flexibility to allocate those savings toward future property tax payments. This approach enhances your financial planning and makes buying or investing in Texas property even more affordable.

The average property tax in Texas is 1.60%. The taxes in the state are set by local governments and are based on property value assessments.

To lower your property taxes in Texas, you can apply for exemptions like the homestead, veteran, or senior exemption.

In Texas, property taxes are due on January 31st each year. If taxes are unpaid by this date, penalties and interest will accrue. This may lead to tax liens or foreclosure.

Save Big when you Buy a Home with reAlpha!

Discover how our all-in-one homebuying platform can increase your buying power and put money back in your pocket. Start your journey today!

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