Introduction
Texas is a no-income-tax state, but it makes up for it with high property taxes. Texas ranks among the highest property tax states in the U.S., with an average effective property tax rate of 1.6%.
This guide explains how Texas property taxes are calculated, payment deadlines, exemptions available, and how homeowners can reduce their tax burden.
1. How Are Property Taxes Calculated in Texas?
Property tax in Texas is based on appraised property value and local tax rates. The formula for calculating property tax is:
Property Tax = (Appraised Value – Exemptions) × Local Tax Rate
Factors Affecting Texas Property Tax Rates
- County and City Rates – Varies by location.
- School District Taxes – Largest portion of property tax bills.
- Special District Taxes – Covers services like utilities, hospitals, and emergency response.
Average Property Tax Rates by County in Texas
| County | Average Property Tax Rate | Median Property Tax Bill |
|---|---|---|
| Travis (Austin) | 1.80% | $5,000+ |
| Harris (Houston) | 2.01% | $4,600 |
| Dallas (Dallas) | 1.93% | $4,200 |
| Bexar (San Antonio) | 1.97% | $3,700 |
| Tarrant (Fort Worth) | 2.10% | $3,800 |
| El Paso (El Paso) | 2.22% | $3,000 |
Texas property tax rates vary depending on county and school district levies.
When Are Property Taxes Due in Texas?
- Tax Bills Sent: October
- Payment Deadline: January 31 (following year)
- Late Payment Penalty: 6% penalty + 1% interest per month
If property taxes remain unpaid by July 1, a 20% penalty is added, and the account may be sent to collections.
How to Lower Your Property Tax Bill in Texas
1. Apply for a Texas Homestead Exemption
- Lowers taxable value for primary residences.
- General homestead exemption: Up to $100,000 off school district taxes (for 2025).
2. Senior Citizen & Disabled Exemptions
- Homeowners 65+ or disabled can apply for an additional $10,000 exemption.
- Freezes school district taxes at current levels.
3. Apply for a Property Tax Protest
- Homeowners can contest property appraisals if they believe their home is overvalued.
- File a protest by May 15 with the local Appraisal Review Board (ARB).
4. Look for Agricultural Exemptions
- Properties used for farming, ranching, or timberland qualify for lower tax rates.
5. Make Property Tax Payments Early
- Some counties offer early payment discounts (1-3%).
How to Protest Your Property Tax Appraisal in Texas
Step 1: Check Your Appraisal Value
- Review your Notice of Appraised Value (sent by county).
Step 2: Gather Evidence
- Recent home sales data for comparable properties.
- Any structural damage or factors lowering home value.
Step 3: File a Protest
- File with the Appraisal Review Board (ARB) by May 15.
Step 4: Attend the Hearing
- Present your evidence to argue for a lower home valuation.
Step 5: Receive Decision
- If approved, your property tax bill will be adjusted accordingly.
Common Mistakes to Avoid with Texas Property Taxes
- Not applying for homestead exemptions – Can save thousands on property taxes.
- Failing to protest high appraisals – Many homeowners overpay due to inflated valuations.
- Paying property taxes late – Leads to penalties and interest charges.
- Not reviewing annual tax bills – Always verify assessment accuracy.
How Texas Property Taxes Compare to Other States
| State | Average Property Tax Rate | Median Annual Tax Bill |
|---|---|---|
| Texas | 1.6% | $4,000+ |
| California | 0.76% | $4,500 |
| Florida | 0.89% | $3,200 |
| New York | 1.72% | $8,900 |
| Illinois | 2.23% | $5,800 |
Texas has one of the highest property tax rates, but no state income tax offsets this burden.
Texas Property Tax for Real Estate Investors
Pros for Investors
- No state income tax on rental income.
- High property appreciation rates in major cities.
- Tax deductions available for property taxes and depreciation.
Cons for Investors
- High property tax rates reduce rental profits.
- Limited exemptions for non-primary residences.
IRS Tax Deductions for Texas Homeowners
Texas homeowners may claim these deductions on federal tax returns:
- Mortgage Interest Deduction (Form 1040, Schedule A).
- Property Tax Deduction (up to $10,000 per year).
- Depreciation Deduction for Rental Properties (Form 4562).
What Happens If You Don’t Pay Texas Property Taxes?
| Missed Payment | Penalty |
|---|---|
| After January 31 | 6% penalty + 1% monthly interest |
| After July 1 | 20% penalty + collections |
Long-Term Non-Payment Foreclosure risk
If property taxes remain unpaid, the county can place a lien on the property and eventually auction the home.
Conclusion
Texas homeowners face high property tax rates, but exemptions and protests can help reduce tax bills. It is crucial to apply for exemptions, review assessments, and make timely payments to avoid penalties.
For expert property tax planning, schedule a meeting with our CPA Anshul Goyal by clicking at https://calendly.com/anshulcpa/ now.
1. Why are property taxes high in Texas?
Texas does not have a state income tax, so property taxes fund schools, roads, and public services.
2. How can I lower my Texas property tax bill?
Apply for a homestead exemption, senior exemption, or protest your property value.
3. When is the Texas property tax deadline?
Property taxes are due January 31 each year.
4. Can I deduct Texas property taxes on my federal return?
Yes, homeowners can deduct up to $10,000 in property taxes on federal taxes.
5. What happens if I don’t pay my Texas property taxes?
- 6% penalty + 1% monthly interest after January 31.
- 20% penalty if unpaid by July 1.
- Possible foreclosure for long-term non-payment.