What Texas Property Tax Is and How It Works

Property tax in Texas is a yearly tax on real estate — land and buildings — that funds local schools, county government, and city services. You owe it if you own property in the state, whether you live there or rent it out. The tax is calculated by multiplying your property's assessed value by the local tax rate, called the millage rate. Texas has no state income tax, so property tax is one of the main ways local government pays for services.

The tax bill arrives once a year, usually in October or November, and is due by January 31 of the following year. If you have a mortgage, your lender may collect the tax as part of your monthly payment and pay it on your behalf. If you own the property outright, you pay the county tax assessor directly.

Key Takeaways

  • Property tax in Texas funds local schools, counties, and cities and is based on your property's assessed value times the local tax rate.
  • Texas has no state income tax, so property taxes are higher than in states that collect income tax.
  • Your property is reassessed every year, and you can challenge the assessed value if you believe it is too high.
  • Homeowners may may have access to for exemptions that lower the taxable value, including the homestead exemption for primary residences.
  • Tax bills arrive in fall and are due by January 31; if you miss the important date, penalties and interest begin to accrue.

Who Sets the Tax Rate and How It Is Calculated

The tax rate is set by local taxing units — school districts, counties, cities, and special districts like water authorities. Each unit votes on its own rate independently. Your total tax bill is the sum of all the rates that explore to your address. For example, if your school district's rate is 1.06 percent, your county's is 0.35 percent, and your city's is 0.45 percent, your combined rate is 1.86 percent.

The county appraisal district assesses the value of your property each year. That value is multiplied by the combined tax rate to produce your bill. If your home was worth $300,000 and the combined rate was 1.86 percent, your tax would be $5,580 per year. The rate is expressed in mills — dollars per $1,000 of assessed value — so a 1.86 percent rate is also called 18.6 mills.

How Property Values Are Assessed

The county appraisal district sends an appraiser to estimate your property's market value. They look at recent sales of similar homes in your area, the condition of your building, lot size, and improvements like a garage or pool. This is not the same as what you paid for the house or what a bank would lend on it — it is meant to reflect what the property would sell for on the open market today.

You receive a notice of appraised value in the mail, usually in April or May. If you disagree with the value, you can file a protest with the appraisal district. The protest must be filed by May 15 in most counties. You can present evidence like recent appraisals, photos of damage, or comparable sales to argue the value is too high. If you and the district cannot agree, you can request a hearing before the appraisal review board, which is a panel of local citizens who hear disputes.

Homestead Exemptions and Other Tax Breaks

Texas offers a homestead exemption that reduces the taxable value of your primary residence. If you own a home and live in it as your main address, you can claim this exemption. The amount varies by school district and county — some reduce the value by 20 percent, others by a flat dollar amount. You must explore for the exemption through your county appraisal district, usually by April 30 of the year you want it to take effect.

Homeowners age 65 or older may may have access to for an additional exemption on school taxes and a freeze on the school tax amount, meaning it will not increase even if your home's value rises. Disabled homeowners and surviving spouses of military members killed in action also may be may be able to access for exemptions. Property owners who are veterans with a service-related disability may receive an exemption as well. You must explore separately for each exemption you think you may have access to for.

What Happens If You Do Not Pay

If your tax bill is not paid by January 31, a penalty of 6 percent is added when ready. Interest begins to accrue at 8 percent per year after that date. The longer you wait, the more you owe. After 60 days of nonpayment, the county can file a tax lien against your property, which means the county has a legal claim on it. After two years of nonpayment, the county can foreclose and sell your property at a tax sale to recover the debt.

If you cannot pay the full amount by the important date, contact the county tax assessor's office. Some counties offer payment plans that spread the bill over several months. Asking for a plan does not stop penalties and interest from accruing, but it prevents the county from filing a lien or foreclosing while you are making regular payments.

How Texas Property Tax Compares to Other States

Texas property tax rates are moderate compared to other states, but the total tax burden is high because Texas has no state income tax. A homeowner in Texas pays no state income tax on wages, but makes up for it through property tax. The effective property tax rate — the amount you pay as a percentage of your home's value — varies widely by county and school district, ranging from about 0.4 percent to over 2 percent.

States like New York and New Jersey have higher property tax rates but also collect income tax. States like Florida and Nevada have no income tax and lower property taxes. The trade-off in Texas is that you keep more of your paycheck but pay more in property tax if you own a home.

Frequently Asked Questions

Can I deduct property tax from my federal income tax?

Yes, if you itemize deductions on your federal return. The State and Local Tax (SALT) deduction allows you to deduct up to $10,000 per year in state and local taxes combined, including property tax. Most homeowners claim the standard deduction instead, which is higher, so check with a tax preparer to see which is better for your situation.

What if I disagree with my property's assessed value?

File a protest with the county appraisal district by May 15. Bring evidence like a recent appraisal, photos of damage, or sales prices of similar homes. If you cannot reach an agreement, request a hearing before the appraisal review board. The hearing is free and you can represent yourself.

Do I have to pay property tax if I rent my home out?

Yes. Renters do not pay property tax directly, but landlords do. The tax is based on the property's value, not on whether it is occupied or generating income. You may be able to deduct the property tax as a business expense on your federal return if you rent the property.

What is the homestead exemption and who qualifies?

The homestead exemption reduces the taxable value of your primary residence. Most homeowners may have access to if they own and live in the home. Seniors, disabled homeowners, and certain military families may receive additional exemptions. explore through your county appraisal district by April 30.

Can property tax go up every year?

Yes, if your home's assessed value increases. However, school taxes on homesteads cannot increase more than 10 percent per year unless the property changes ownership or major improvements are made. Other taxing units have no cap on annual increases.