A property tax increase in Texas almost always traces to one of two things: the county appraisal district raised your home’s appraised value, or a local taxing unit adopted a higher rate. Often both happen in the same year. Because Texas has no state personal income tax, local property taxes fund schools, roads, fire departments, and law enforcement, which is why the numbers move so much and why the state has layered on caps, exemptions, and a protest process to keep the increases in check.
Where the Increase Comes From
Your bill is the product of two numbers. The first is the appraised value your county appraisal district assigns to your property as of January 1 each year, based on what it would sell for between a willing buyer and seller in a normal transaction.1State of Texas. Texas Code TAX 23.01 – Appraisals Generally Exemptions come off that appraised value to produce a taxable value. The second number is the tax rate. Every taxing unit that covers your property applies its own rate: school district, county, city, hospital district, community college district, and sometimes others. Add those line items together and you have the annual bill.
So an increase can come from either side. A hot real estate market lifts appraised values and pushes the bill up even when no rate changes. A single taxing unit can raise its rate and push the bill up even if your value is flat. Most Texas homeowners are dealing with both at once.
Caps That Limit How Fast Your Appraised Value Can Rise
The 10% Homestead Cap
If you own and occupy the home as your principal residence and have filed for a homestead exemption, your appraised value cannot rise by more than 10 percent per year, no matter what the market is doing.2Texas Comptroller of Public Accounts. Valuing Property The cap is measured against last year’s appraised value plus the value of any new improvements. A home appraised at $300,000 last year cannot be appraised above $330,000 this year, even if comparable homes are selling for $400,000. The capped value catches up to market over time, but the cap prevents sudden doublings.
The New 20% Cap on Smaller Non-Homestead Properties
Commercial buildings, rental homes, and vacant land had no appraisal cap for years, so their values could jump by any amount. Senate Bill 2 changed that. Starting January 1, 2024, non-homestead real property valued at $5 million or less is protected by a 20 percent annual cap on appraised-value increases.3Texas Legislature Online. SB 2 – Committee Report Anything above that threshold remains uncapped. The protection is real, but at twice the homestead rate, annual increases can still be steep.
Limits on How Much Taxing Units Can Raise Rates
Cities, counties, and special districts cannot raise revenue freely. If the adopted rate exceeds the entity’s “voter-approval tax rate,” an automatic election lets residents reject it.4Texas Comptroller of Public Accounts. Elections to Approve Tax Rate A majority “no” vote drops the rate back to the voter-approval rate for that year. The precise threshold varies with the type of entity and its population, but the principle is uniform: sizable rate hikes need public approval.
School districts run on a different formula. SB 2 introduced a rate compression mechanism that forces districts to lower their rates as property values climb, cutting each district’s maximum compressed rate by $0.107 per $100 of taxable value for the 2023–2024 school year, with a floor so no district’s rate drops below 90 percent of the lowest district’s rate.3Texas Legislature Online. SB 2 – Committee Report The idea is to keep school tax bills from spiraling when values surge.
Exemptions That Shrink the Taxable Value
General Residence Homestead Exemption
The most common exemption removes a flat dollar amount from your appraised value before school district taxes are calculated. SB 2 raised the school district homestead exemption from $40,000 to $100,000, directly lowering the taxable value used for the school portion of your bill.5Texas Legislature Online. Texas Senate Bill 2 – Property Tax Relief Act To qualify, you must own the property, live in it as your primary residence, and hold a Texas driver’s license or state ID with a matching address.6Texas Comptroller of Public Accounts. Property Tax Exemptions Apply once through your local appraisal district; the exemption continues as long as you live there.
Cities and counties may layer their own optional homestead exemptions on top. Amounts vary, so check with your appraisal district.
Over-65 and Disability Exemptions
Homeowners who turn 65 during the tax year qualify for an additional exemption on top of the general homestead. Those who meet the Social Security Administration’s disability definition can apply for a similar benefit. Both trigger a school district tax ceiling that freezes the dollar amount of your school taxes at the level you paid in the year you first qualified. The ceiling can go down if rates fall or exemptions rise, but it never goes up. You’ll need supporting documents: a birth certificate for the age-based exemption, a disability award letter for the disability version.
You cannot claim both the over-65 and disability exemptions from the same taxing unit in the same year. If you qualify for both, pick the one that gives the larger benefit for each taxing unit.
Disabled Veteran Exemptions
Veterans with a service-connected VA disability rating receive a partial exemption scaled to the rating percentage. Veterans rated at 100 percent, or rated unemployable due to a service-connected condition, qualify for a full exemption on their homestead, meaning zero property tax on that home. A surviving spouse who has not remarried can continue the exemption. Apply through your local appraisal district with your VA determination letter.
How to Protest Your Appraised Value
Deadline and Form
If the appraisal notice shows a value you believe is too high, file a protest. The deadline is May 15 or 30 days after the appraisal district mails your notice, whichever is later. You can protest even if you never received a notice in the mail.
The form is called a Notice of Protest. There are two versions: Form 50-132 for counties with populations over 120,000 and Form 50-132-A for smaller counties.7Texas Comptroller of Public Accounts. Property Owner’s Notice of Protest – Form 50-132 Both are on the Texas Comptroller’s website and through your appraisal district’s portal. Select a specific reason on the form, usually “value is over market value” or “value is unequal compared with other properties.” The ground you pick controls what evidence the appraisal review board will consider.
Building Evidence
A protest without evidence is just a complaint. Pull recent sale prices for comparable homes in your neighborhood that closed near the January 1 valuation date. Those are the same data points the district uses, and showing that similar homes sold for less than your appraised value is the most direct argument. If your home has physical problems, document them with photos and written repair estimates. Foundation cracks, roof damage, outdated systems, and flood history all justify a lower value. Specific numbers persuade: “the roof needs $14,000 in repairs” works; “the house needs work” does not.
The Hearing and What Comes After
The process begins with an informal meeting between you and a staff appraiser. Many protests settle here: you trade evidence, negotiate a value, and you’re done for the year. If not, the case moves to a formal hearing before the Appraisal Review Board. Both sides present under a time limit, the board deliberates, and a written order follows setting your taxable value.
If the board’s decision still feels wrong, two routes remain. Binding arbitration means filing a request with the Comptroller within 45 days of the order, along with a deposit; if the arbitrator lands closer to your value, the district pays and your deposit is largely refunded. The other route is a lawsuit in state district court, which involves attorney fees and a longer timeline. For most homes, arbitration is more practical.
You can handle a protest yourself, but property tax consultants who work with your appraisal district daily often know which arguments carry weight. Consultants must be licensed by the Texas Department of Licensing and Regulation.8Texas Department of Licensing and Regulation. Property Tax Consultants Most work on contingency, typically 20 to 50 percent of first-year tax savings, so there’s no fee unless the protest succeeds. Verify the license on TDLR’s site before signing.
What Happens If You Don’t Pay
Property taxes are due January 31. On February 1 the county adds a 6 percent penalty plus interest. Each additional month of delinquency adds another 1 percent. On July 1 the cumulative penalty jumps to 12 percent and stops there, but interest keeps accruing.9Texas Comptroller of Public Accounts. Penalty Tax Bills Once the taxing unit hires an attorney to collect, you may also face a collection penalty or attorney’s fees of up to 15 percent of taxes, penalties, and interest owed. The unit can pursue one collection fee method but not both.
Unpaid taxes turn into a tax lien and, eventually, a lawsuit and court-ordered sale at auction. Missing a single year is recoverable. Letting taxes go delinquent for several years can genuinely cost you the home.
Federal Deduction on Higher Bills
With no state income tax in Texas, property taxes are usually the largest state and local tax you pay, and they’re deductible on your federal return if you itemize. The deduction covers taxes based on assessed value and levied for general public welfare. It does not cover special assessments for improvements that raise your property’s value, like sidewalks or sewer lines, and it does not cover service fees like trash or water.10Internal Revenue Service. Real Estate Taxes, Mortgage Interest, Points, Other Property Expenses
The federal cap on combined state and local tax deductions is $40,000 for most filers, or $20,000 if married filing separately.10Internal Revenue Service. Real Estate Taxes, Mortgage Interest, Points, Other Property Expenses Because Texas has no income tax eating into that cap, most Texas homeowners can apply the full allowance to property taxes. It only helps if your total itemized deductions exceed the standard deduction, so run the numbers both ways.