The Texas Property Tax Rate Reality

Property taxes in Texas are assessed by county appraisal districts (CADs) and fund local school districts, county government, municipal services, and special purpose districts (MUDs, hospital districts, community college districts). Because Texas has multiple taxing jurisdictions stacking on top of each other, the total effective rate is higher than most states: Typical effective rates (2025): • Austin and suburbs (Travis, Williamson, Hays County): 1.8–2.3% • Dallas-Fort Worth suburbs (Collin, Denton, Tarrant County): 1.9–2.5% • Houston area (Harris, Fort Bend, Montgomery County): 1.9–2.4% • San Antonio (Bexar County): 1.8–2.1% Dollar impact by home value: • $300,000 home at 2.1%: $6,300/year ($525/month) • $450,000 home at 2.1%: $9,450/year ($788/month) • $650,000 home at 2.1%: $13,650/year ($1,138/month) • $1,000,000 home at 2.1%: $21,000/year ($1,750/month) These amounts are collected monthly by the mortgage servicer as part of PITI and paid annually to the county.

The 10% Homestead Cap: A Critical Buyer Benefit

Once you file a homestead exemption on your Texas primary residence, state law caps the annual increase in your assessed value at 10%. This cap does not apply to the market value of your home — only to the assessed value used for tax purposes. Why this matters: in rapidly appreciating markets, the cap protects homeowners from corresponding rapid tax increases. If your home's market value increases 25% in one year, your assessed value for tax purposes can only increase 10% that year (and 10% the next year, and so on, until assessment catches up over multiple years). The cap only applies AFTER the homestead exemption is filed. If you purchase a home and don't file the exemption, there is no cap. File the exemption with your county appraisal district by April 30 for the current tax year. Important for buyers: the cap resets when a property changes ownership. The seller's assessed value (which may be lower than market value due to years of the 10% cap) does NOT carry over to the buyer. Your first year's assessed value will reflect current market value, not the seller's capped value.

Property Tax Protests: A Texas Homeowner Right

Every Texas property owner has the right to protest their appraised value annually if they believe it exceeds market value. Protest deadline: May 15 of each year (or 30 days after notice of appraised value is received, whichever is later). Process: file a protest with the county appraisal district; provide evidence (comparable sales, independent appraisal, sales price if recently purchased); attend informal hearing with appraiser; if unresolved, formal hearing before Appraisal Review Board. Success rate: approximately 50–60% of protests that go to hearing result in some reduction. Evidence of recent sale price (your purchase contract) is powerful evidence against an appraised value that exceeds what you paid. Many Texas homeowners use property tax protest services (typically 30–40% of the first year's tax savings as the fee) that handle the protest on their behalf.

“Property taxes are the number one financial surprise for buyers relocating to Texas from lower-tax states. A buyer from California who is excited about no state income tax needs to understand that on a $700,000 home, they will pay $14,000–17,500 per year in property taxes. That is $1,167–1,458 per month built into their PITI. That number changes the effective monthly housing cost substantially and needs to be part of the affordability conversation before they select a target price range.”

— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®

• Texas Homebuying Guide (Hub)
• Step-by-Step Texas Process
• Texas Closing Costs
• The Texas Option Period
• Texas Homestead Exemption
• Texas First-Time Buyer Programs
• Best Texas Markets to Buy

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