Learn more about how property taxes are calculated in texas


When I talk to California residents looking to make the move to Austin, one of the first conversations we have is centered around Texas’ property taxes. Specifically, why Texas’ property taxes are higher than those of California.

Here’s what you need to know:

Texas is a Non-Disclosure State

Texas is a non-disclosure state, meaning that the state does not know what the closing price of your home was. In fact, the only people who know that figure are those who are a licensed REALTOR® or a member of the local MLS. Therefore, the state cannot base its tax value off the closing price. Instead, it must tax a property based upon the assessed value, known as ad valorem.

To determine the value, a county assessor takes many factors into account, including how many properties are on the market in the area, the original list price and how quickly the home sold. Usually, the assessed value doesn’t equate to the market value, in some cases coming in at 10% less. 

Texas does NOT have State Income Tax

There's NOT a Single Tax Rate!

In addition to the lower cost of living, one of the advantages to calling Texas home is its lack of a state income tax. What exactly does this mean? 

Because we don’t generate revenue at the state level, like California, our property taxes are higher so we can still fund public services. I always advise my clients to sit down and look at the numbers in order to see which state is truly less expensive. 

Usually you’ll find that you’re better off in Texas. 

Texas does not abide by a “one size fits all” approach when it comes to setting tax rates. In fact, friends living in the same city, within the same county, can pay two different tax rates. This is because our tax rates are based on numerous factors, including school and hospital bonds, infrastructure and other local services. 

For example, newer developments will often see higher tax rates due to the increased infrastructure in the area. 

These decisions happen at the local level, meaning that property tax rates change from area to area, so it’s necessary to look at the small details when it comes to each home. 

You can Protest your Assessed Value

Texas has 254 counties, each with its own assessor and process for assessing property values. 

If you believe that the assessor has misjudged the value of your property, or if the taxable value is higher than that of similar homes in the area, you can contact your local tax assessor to pursue and appeal.

You can represent yourself through this process, or hire a company that specializes in it. If you win the appeal, the new assessed value is what you will pay taxes on.



The tax assessment process begins each year in January. In Texas, property taxes are based on the taxable value of the property—the assessed value minus deductions and exemptions. Each county has a central authority that is responsible for determining that value. 

An appraisal district will set the value of taxable property each year. These appraisal districts are run by county appraisers and responsible to a board of directors. They administer an appraisal review board (ARB) that settles protests regarding the assessed value.

Local taxing units, which include the county, city, school districts and special districts, decide how much money they will spend each year. This determines the tax rate that they need to set, based on the total amount of tax revenue that needs to be raised. 

The system has four stages: valuing the taxable property, protesting the values, adopting the tax rates and collecting the taxes.

Declaring a homestead will remove part of your home’s value from taxation, lowering your taxes. Texas law stipulates that school districts must offer a $25,000 exemption on residential homesteads. Counties have the option to offer a separate homestead exemption of up to 20% of the property’s appraised value. A homestead exemption also stipulates that the assessed property value can not increase by more than 10 percent each year. 

A homestead can be a separate structure, condo or manufactured home located on owned or leased land, as long as the individual who is living in the home owns it. A homestead can include up to 20 acres of owned land, as long as the land is used for a purpose related to the residential use of the homestead. 

Only primary residences qualify. The homestead’s owner must be an individual and using the home as their primary residence.

Other Property Tax Exemptions

In addition to the homestead exemption, Texas offers a number of partial or absolute property tax exemptions. A partial exemption takes away a percentage, or a fixed dollar amount, from the tax assessment, while an absolute exemption excludes the entire property from taxation. The state requires local taxing units to abide by certain exemptions while others are put in place at the local level. 

Senior citizens and the disabled are eligible for a $10,000 exemption from school taxes thanks to Texas Tax Code § 11.13(c). Some local taxing authorities give an additional exemption as well. 

Disabled veterans are eligible for an exemption of up to $12,000 depending on age and disability rating. Veterans with a 100% disability rating are fully exempt from property taxes. For more information, see Tex. Tax Code § 11.22.

Veteran’s surviving spouses can inherit their spouse’s exemption upon his or her death, as long as the surviving spouse has not remarried. Additional exemptions apply to the immediate family of a service member that dies on active duty. 

Are you confused? Don’t worry! I can talk you through all things property taxes.