Understanding Property Taxes in Texas

Determining Texas Property Taxes

Texans are fortunate to be one of nine states not subject to a state income tax. Still, state and local governments need funding to function, and one type of ad valorem tax, the property tax, is a large source of that local funding. Ad valorem is a Latin phrase meaning, “according to value,” and Texas property is valued at a higher rate than many other states. The average property tax rate for Texans is 1.6%, amounting to about $5,605. Property owners in Texas may benefit from knowing about how their high property taxes are assessed and how it might be possible to lower them.


Because property taxes are a type of ad valorem tax, the value of an acre of land may vary substantially from one part of Texas to the next. No state property tax exists in Texas; instead, each county in Texas assesses the value of a property separately. That means an acre of land in King County likely has a higher value resulting in higher property taxes than an acre of land in Terrell County. The property owner pays a tax which is determined by the value of that property.


Based on the condition of the property on January 1st of the tax year, the fair market value of the property is determined by local appraisal districts who may inspect the property and consider such facts as comparable properties in the area, the property use, projected income from the property, and its potential depreciation. This fair market value reflects the amount that a buyer is willing to pay and a seller is willing to accept, based on reasonable knowledge about the property. Property taxes are comprised of school taxes, hospital taxes, municipal utility district taxes if applicable, and other local taxes.

Each taxing authority analyzes the funding needs of the county, city, school districts, or other local entities. Using this information, they set a tax rate which will fund that budget. Sometime around April, property owners receive notification of the taxes they must send to the county tax assessor-collector by January 31 of the following year. For more information, please visit the state comptroller’s website.

Options for Property Owners

Fortunately, owners have some options for lowering their property taxes. One option is to protest the appraised value of the property. Within 30 days of receiving Notice of the Appraised Value, the owner may file a protest. Some counties allow on-line protests which may offer a settlement value to property owners. If the property owner does not receive or does not accept that settlement, an informal hearing with an appraisal district representative is often the next step, which frequently leads to a settlement. If not, the property owner may then protest in a formal hearing.

Another way to lower property taxes is to take full advantage of property tax exemptions. Homestead Exemptions and the Over 65 exemption are two examples. Not only do the exemptions reduce taxes, but the homestead exemption also guarantees that property values may not increase more than 10% annually. The Over 65 Exemption has the benefit of lowering the taxed value while also freezing the amount payable for school taxes each year. Other exemptions are available to veterans and disabled Texans. In fact, changes to property taxes have recently gone into effect which benefit veterans, the elderly, and the disabled.

Property taxes and ad valorem taxes provide local governments with the resources they need to fund schools, libraries, hospitals, roads, and other community enhancements, so that money is vital to a successful community. Should property taxes become too big a burden for a homeowner, however, an experienced real estate attorney will help a client manage and even reduce property taxes.

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