Texas property taxes are levied entirely by local taxing units rather than the state, calculated each year by applying local rates to the appraised value of your property as of January 1, minus any exemptions you qualify for. The average effective rate across the state runs around 1.36 percent of a home’s value, which puts Texas among the higher property tax states in the country. A single home often appears on bills from a county, a city, a school district, and one or more special districts, each with its own rate.
Who Sets and Collects the Tax
The Texas Constitution prohibits the state from levying any property tax.1State of Texas. Texas Constitution Article 8 – Taxation and Revenue Everything is local: school districts, counties, cities, community colleges, hospital districts, water districts, and other special districts each set their own rate and collect separately. A suburban home might fall within four or five overlapping taxing units.
Every county has a Central Appraisal District (CAD) that identifies taxable property and assigns it a value.2Justia. Texas Tax Code Chapter 6 Subchapter A – Appraisal Districts The CAD does not set rates and does not collect money. School boards, city councils, and other governing bodies decide how much revenue they need and adopt rates to produce it. An independent Appraisal Review Board (ARB) handles disputes when owners believe a value is wrong.
How Your Property Gets a Value Each Year
Every taxable property is appraised at its market value as of January 1.3Texas Comptroller of Public Accounts. Valuing Property Market value is what the property would bring in a cash sale between a willing buyer and a willing seller, both informed and neither under pressure. This covers land, buildings, and tangible personal property used to produce income, such as business equipment or inventory.
Caps on How Fast Your Appraised Value Can Rise
If you have a homestead exemption on file, the CAD cannot raise your appraised value by more than 10 percent per year, plus the value of any new construction.4State of Texas. Texas Tax Code 23.23 – Limitation on Appraised Value of Residence Homestead The cap takes effect on January 1 of the year after you first qualify, which is why getting the exemption on file quickly matters. If your home’s true market value jumped 25 percent in a year, the CAD can still only raise your appraised value by 10 percent for tax purposes.
A separate circuit breaker caps increases at 20 percent per year for non-homestead residential and commercial properties.5State of Texas. Texas Tax Code 23.231 – Circuit Breaker Limitation on Appraised Value It does not apply to properties already receiving a homestead exemption, which get the stronger 10 percent cap, and it does not apply to agricultural land. The circuit breaker is currently set to expire on December 31, 2026, so its future depends on legislative action.
How Your Bill Is Calculated
The formula is straightforward: take the taxable value (appraised value minus any exemptions), divide by 100, and multiply by the tax rate. Say your home is appraised at $350,000 and you have a $100,000 school district homestead exemption. Taxable value for the school district is $250,000. At a rate of $1.05 per $100, school taxes alone come to $2,625. Repeat for every taxing unit on your bill and add the results.
Each taxing unit adopts its rate through a public process. State law requires every unit to calculate a no-new-revenue tax rate, which is the rate that would produce the same total revenue as the prior year after accounting for changes in property values. If a governing body wants a rate above the voter-approval tax rate, the unit must hold an election.6Texas Comptroller of Public Accounts. Elections to Approve Tax Rate These truth-in-taxation rules are the main check on local governments raising rates without accountability.
Exemptions That Lower What You Owe
General Residence Homestead Exemption
The most widely used exemption removes $100,000 from the appraised value of your primary home for school district taxes.7State of Texas. Texas Tax Code 11.13 – Residence Homestead Texas voters approved this amount in 2023, more than doubling it from the previous $40,000. To qualify, you must own the home and live in it as your principal residence, and you need a Texas driver’s license or state ID with an address matching the property. The filing deadline is generally April 30 of the tax year, and the application goes to your county’s appraisal district.8Texas Comptroller of Public Accounts. Residence Homestead Exemptions Once approved, the exemption stays in place as long as you live there. You do not need to reapply each year.
Cities and counties can adopt their own optional homestead exemptions on top of the school district exemption. Some offer a percentage of value (up to 20 percent), others a flat dollar amount. Check your local CAD website or tax office to see what applies to you.
Over-65 and Disabled Homeowner Exemptions
If you are 65 or older or have a qualifying disability, you receive an additional $10,000 school district exemption on top of the general homestead exemption.7State of Texas. Texas Tax Code 11.13 – Residence Homestead Other taxing units can adopt their own additional exemptions for seniors and disabled homeowners, with a minimum of $3,000 where offered. You’ll need proof of age or a disability award letter when applying.
Disabled Veteran Exemptions
Veterans with a service-connected disability receive a partial exemption based on their VA rating:
- 10 to 29 percent rating: up to $5,000 off the assessed value
- 30 to 49 percent rating: up to $7,500
- 50 to 69 percent rating: up to $10,000
- 70 percent or higher: up to $12,000
A veteran who is 65 or older with any rating of at least 10 percent, or who has lost the use of a limb or is blind, qualifies for the $12,000 exemption regardless of tier.9State of Texas. Texas Tax Code 11.22 – Disabled Veterans These partial exemptions can apply to any property the veteran owns, not just a homestead.
Veterans rated 100 percent disabled, or classified as individually unemployable by the VA, qualify for a complete exemption on their residence homestead and pay zero property tax on that home.10Texas Comptroller of Public Accounts. 100 Percent Disabled Veteran and Surviving Spouse Frequently Asked Questions Surviving spouses of veterans who died on active duty or from service-connected causes may also qualify for a full homestead exemption.
The Tax Ceiling for Seniors and Disabled Homeowners
Beyond the additional exemption, homeowners who are 65 or older or disabled get a ceiling (sometimes called a freeze) on their school district taxes. Once you qualify, the school district cannot collect more than the dollar amount it charged in the year you first qualified, even if your value rises or the rate goes up. Adding an improvement like a room addition will adjust the ceiling upward to reflect that improvement, but ordinary market appreciation does not break it. Cities and counties may adopt their own optional ceilings, though not all do.
The ceiling follows you in a limited way. If you move to a different homestead within Texas, the new school district calculates a proportional ceiling based on the percentage of taxes you were paying at your old home relative to what you would have owed without the freeze.
When and How to Pay
Bills typically go out in October and cover the current tax year. Payment is due upon receipt, and the account becomes delinquent if you have not paid in full before February 1 of the following year.11State of Texas. Texas Tax Code 31.02 – Delinquency Date Most county tax offices accept payments online, by mail, or in person. Online credit card payments usually carry a processing fee of 2 to 3 percent; electronic checks are often free or low-cost.
If you have a mortgage, your lender almost certainly collects property taxes through an escrow account built into your monthly payment. Federal law requires your mortgage servicer to send an annual escrow statement showing what was paid on your behalf and whether the account has a surplus or shortage.12Consumer Financial Protection Bureau. 12 CFR 1024.17 – Escrow Accounts When property taxes rise after a reappraisal, your monthly mortgage payment usually goes up as the servicer adjusts for the shortfall. Read the annual statement carefully. Escrow miscalculations happen more often than most homeowners realize.
Installment Plans for Qualifying Homeowners
Homeowners 65 or older, those with a qualifying disability, and certain disabled veterans can split the bill into four equal installments without penalty or interest.13State of Texas. Texas Tax Code 31.031 – Installment Payments The first installment must be paid before the delinquency date, and you must notify the tax office in writing that you intend to pay in installments. The remaining payments are due before April 1, June 1, and August 1. Missing an installment triggers a 6 percent penalty and monthly interest on the unpaid amount.
Deferrals
Qualifying homeowners who are 65 or older, disabled, or disabled veterans can defer collection of all property taxes on their homestead entirely.14State of Texas. Texas Tax Code 33.06 – Deferred Collection of Taxes on Residence Homestead of Elderly or Disabled Person or Disabled Veteran Filing an affidavit with the chief appraiser stops all collection activity, lawsuits, and tax-sale threats on that property for as long as you own and occupy it. The taxes still accrue and continue accumulating interest at 5 percent per year, so the balance grows. Once you move out, sell, or pass away, the taxing units can begin collection 181 days later.
What Happens If You Pay Late
A delinquent bill incurs a 6 percent penalty in the first month, then an additional 1 percent for each month through June.15State of Texas. Texas Tax Code 33.01 – Penalties and Interest On July 1 the total penalty jumps to 12 percent regardless of how many months have actually passed. On top of the penalty, the tax accrues interest at 1 percent per month from the date of delinquency. An additional collection penalty of up to 20 percent may apply once the account is referred to a delinquent tax attorney.16Texas Comptroller of Public Accounts. 2025 and 2026 Penalty and Interest Chart
In real numbers: a $5,000 bill left unpaid through July would owe $600 in penalties plus at least $250 in interest, and potentially another $1,000 if the account is sent to collections. If taxes stay unpaid long enough, the taxing units can file suit and eventually force a sale of the property to satisfy the debt.
Protesting an Appraisal You Think Is Too High
If you believe the CAD assigned your property a value that’s too high, file a written Notice of Protest with the Appraisal Review Board by May 15, or by the 30th day after the appraisal district mails your notice of appraised value, whichever is later.17State of Texas. Texas Tax Code Chapter 41 – Local Review You can protest more than just the dollar value. Grounds include unequal appraisal compared to similar properties, denial of an exemption, or incorrect classification of your property.
Most appraisal districts start with an informal meeting where you sit down with a staff appraiser and present your evidence: recent comparable sales, photos of property damage, repair estimates, or an independent appraisal. A surprising number of protests settle at this stage. If you and the appraiser cannot agree, the case moves to a formal hearing before the ARB, which reviews evidence from both sides and issues a binding order setting the value for the year.
An ARB decision is not the end of the road. You can request binding arbitration by filing with the state Comptroller within 60 days of receiving the ARB’s order.18State of Texas. Texas Tax Code 41A.03 – Request for Arbitration Arbitration requires an upfront deposit that ranges from $450 for homesteads valued at $500,000 or less to $1,550 for non-homestead properties valued up to $5 million. Alternatively, you can file a petition in state district court within 60 days of the ARB order; this route generally makes sense for high-value commercial properties where potential tax savings justify the legal costs. You cannot pursue both arbitration and a court appeal on the same property for the same year. Choosing one waives the other.