Are Texas Property Taxes Paid in Arrears?
Gain clarity on Texas property tax payments. Understand the state's unique tax year cycle and how your payments are applied.
Property taxes in Texas are a fundamental component of local government funding, assessed and collected to support various public services such as schools, city operations, and county infrastructure. Understanding the timing and process of these taxes is important for property owners. This article clarifies the annual property tax cycle in Texas, specifically addressing whether these taxes are paid “in arrears.”
The Texas Property Tax Cycle
The Texas property tax year aligns with the calendar year, from January 1st to December 31st. Property values are determined by appraisal districts as of January 1st each year. Appraisal districts issue notices of appraised value to property owners between March and May.
Local taxing units, including cities, counties, and school districts, establish their tax rates in September and October after their budgets are finalized. Tax bills are mailed to property owners in October or November. Though bills arrive late in the year, taxes are levied for the current calendar year, covering January 1st through December 31st of the year the bill is issued.
Although the bill is received late in the year and payment is due early the following year, the taxes relate to the property’s value and services provided during the current year. Texas property taxes are not paid in arrears for prior year obligations. Instead, they are for the current year, with billing and collection extending into the subsequent year.
Payment Deadlines and Options
The deadline for paying Texas property taxes without penalties and interest is January 31st of the year following the tax year. For example, taxes assessed for 2024 are due by January 31, 2025. If payment is not received or postmarked by this date, taxes become delinquent on February 1st.
Taxpayers can submit payments online via e-check or credit/debit card, by mail, or in-person at the local tax office. Credit or debit card payments may incur a processing fee.
Some taxpayers may qualify for installment payment plans, allowing taxes to be paid in four equal installments without penalties or interest. This option is available to individuals aged 65 or older, disabled persons, disabled veterans, and their surviving spouses who make their first payment by January 31st. Subsequent payments are due by March 31st, May 31st, and July 31st. Property owners must ensure timely payment, even if a tax bill is not received.
Understanding Penalties and Delinquency
Failing to pay property taxes by the January 31st deadline results in immediate penalties and interest, beginning on February 1st. The initial penalty is 6% of the unpaid tax amount, plus 1% interest for the first month.
Penalties and interest escalate monthly, with an additional 1% penalty and 1% interest each month. By July 1st, the total penalty reaches 12% of the original tax amount, and interest continues to accrue at 1% monthly. If taxes remain unpaid, an additional collection fee of up to 20% of the total taxes, penalties, and interest may be added when the account is turned over to a delinquent tax attorney for collection.
A tax lien automatically attaches to the property on January 1st of each tax year, securing the payment of property taxes. If delinquent taxes are not paid, the taxing authority can initiate a lawsuit to foreclose on the property. This legal action can lead to the property being sold at a public auction to satisfy the outstanding tax debt. Some property owners, particularly those with homesteads, may have a right of redemption after the tax sale, allowing them to repurchase their property by paying the delinquent amounts, penalties, interest, and an additional premium.