Are Property Taxes Going Down in Texas?

Property taxes in Texas represent a significant financial obligation for homeowners, largely due to the absence of a state income tax. This places substantial reliance on local property taxes to fund essential public services. Recent legislative efforts aim to provide relief, influencing how these taxes are assessed and collected. Understanding your property tax bill, including recent changes, is important for homeowners.

Understanding Recent Legislative Changes to Texas Property Taxes

Texas has seen significant legislative action in recent years to alleviate the property tax burden on homeowners. These reforms primarily focus on increasing homestead exemptions and implementing tax rate compression. They aim to directly reduce the property value subject to taxation and lower rates applied by local entities.

A key reform increased the general residence homestead exemption for school district taxes to $100,000. This exemption, reducing the taxable value of a primary residence, means school tax bills are calculated as if the home is worth $100,000 less than its appraised value, lowering school taxes. This increased exemption applies to all qualified residence homesteads, providing broad relief.

Beyond exemptions, measures also targeted tax rate compression, particularly for school maintenance and operations (M&O) tax rates. Tax rate compression uses state revenue, often from sales tax, to reduce property tax rates set by local school districts. This lowers the rate applied to a property’s taxable value, reducing the overall tax bill.

These legislative changes aim to offer savings to property owners. For example, a reduced school M&O tax rate through compression means that even with increased property values, the applied rate is lower, mitigating the tax impact. These reforms benefit residential properties and businesses, as tax rate compression applies to all property types. While designed to reduce property taxes, the actual impact on an individual’s tax bill can vary based on property value changes and local taxing unit decisions.

Key Components of Your Texas Property Tax Bill

Your property tax bill in Texas is determined by two components: the appraised value of your property and the tax rates set by various local taxing units. These elements calculate the final amount owed. Understanding how each component is established provides clarity on your tax liability.

The appraised value of your property is an estimate of its market value as of January 1 each year. The county appraisal district, an independent entity in each county, conducts this valuation and assesses all taxable property. Appraisal districts use various methods, including market analysis of recent sales of comparable properties, to determine this value.

Once determined, the appraised value is certified to local taxing units with jurisdiction over your property. These taxing units include cities, counties, school districts, and various special districts such as hospital or water districts. Each entity sets its own tax rate, typically expressed as a rate per $100 of appraised value.

The final property tax is calculated by applying these tax rates to your property’s taxable value (appraised value minus exemptions). For example, if a home’s taxable value is $300,000 and the combined tax rate from all local taxing units is 2.1%, the annual tax bill would be $6,300. This calculation ensures funding is generated locally to support essential services like public schools, police and fire protection, and infrastructure.

Navigating Exemptions and Appeals to Reduce Your Tax Burden

Property owners in Texas have several avenues to reduce their property tax burden. These include applying for various exemptions and understanding the process for protesting an appraised value. Utilizing these options can lead to significant savings on annual tax bills.

The general residence homestead exemption is the most common, applying to your primary residence. To qualify, you must own the home and use it as your principal residence, and you cannot claim a residential exemption on another property. Form 50-114 is filed with your county appraisal district between January 1 and April 30, though you can apply up to two years after the delinquency date.

Additional exemptions are available for specific circumstances. Homeowners aged 65 or older and those with a disability can qualify for an additional $10,000 school tax exemption, in addition to the general homestead exemption. Eligibility for the disabled exemption requires meeting the Social Security Administration’s definition of disability. While a homeowner might qualify for both the over-65 and disabled exemptions, they can only receive one from the same taxing unit. Disabled veterans may also qualify for exemptions, with the amount varying based on their disability rating, and in some cases, a total tax exemption on their homestead is possible.

Property owners can protest their property’s appraised value if they believe it is incorrect. The deadline to file a protest is May 15 or 30 days after the appraisal district sends the notice of appraised value, whichever is later. The protest process begins with filing a Notice of Protest (Form 50-132) with the Appraisal Review Board (ARB).

After filing, property owners may have an informal conference with the appraisal district to resolve the dispute. If an agreement is not reached, the protest proceeds to a formal hearing before the ARB, an impartial panel of citizens. Property owners should gather evidence to support their case, such as comparable sales data, photos of property condition, or repair estimates. If still dissatisfied with the ARB’s decision, further appeals can be pursued through district court or binding arbitration within 60 days of receiving the ARB’s order.