Texas collects property tax, and it is among the highest in the nation by effective rate

Texas does have property tax. The state does not levy an income tax, but it funds schools, counties, cities, and special districts through property tax instead. Your property tax bill comes from your local taxing units — usually your school district, county, and city — not from the state. Each of these bodies sets its own tax rate, which is why two houses of identical value can have very different tax bills depending on their location.

The effective property tax rate in Texas — the percentage of home value you pay annually — is higher than the national average. In 2023, Texas homeowners paid an average effective rate of about 1.6 to 1.8 percent of their home's value each year, though this varies significantly by county and school district. A $300,000 home in one Texas county might generate a $4,800 annual tax bill, while the same home in another county could cost $5,400 or more.

Key Takeaways

  • Texas property tax is collected by local taxing units — school districts, counties, and cities — each of which sets its own rate.
  • The state does not collect property tax; instead, it relies on property tax to fund public schools and local government because Texas has no state income tax.
  • Your property tax bill is based on the appraised value of your property, not the price you paid for it, and the appraisal is reassessed every year.
  • Texas offers homestead exemptions that reduce the taxable value of your primary residence, lowering your annual bill by a percentage that varies by school district and county.
  • Property tax rates differ across counties and school districts, so location within Texas significantly affects how much you pay.

Who sets property tax rates in Texas

Property tax in Texas is set locally, not statewide. Your school district, county commissioners court, and city council each vote on the tax rate they will charge. This is why the same property can have different tax burdens depending on which school district, county, and city it sits in. A property in one school district might be taxed at 1.2 percent of appraised value, while an identical property in a neighboring district could be taxed at 1.5 percent.

The Texas Education Agency does not set school property tax rates. Individual school districts do. Counties set their own rates, as do cities and special districts like hospital districts or water districts. If you own property in multiple taxing jurisdictions, you receive separate bills from each one. You can find your local tax rates by contacting your county appraisal district or visiting your school district's website.

How property value is determined for tax purposes

Your property tax is based on the appraised value of your property, not what you paid for it or what it would sell for today. Each county has an appraisal district — a separate government body — that estimates the value of every property in that county. This appraisal happens every year, and the appraised value can go up or down depending on market conditions, improvements you make, or changes in the neighborhood.

You receive a notice of appraised value from your county appraisal district, usually in the spring. If you believe the appraisal is wrong, you can file a protest with the appraisal district's appraisal review board. The important date to protest is typically in May or early June, though the exact date varies by county. You do not need a lawyer to protest; you can do it yourself by submitting a form and supporting documents like recent repair estimates or comparable sales in your area.

Homestead exemptions and other reductions

Texas offers a homestead exemption that reduces the taxable value of your primary residence. If you own a home and live in it as your main residence, you can claim this exemption. The exemption reduces the appraised value used to calculate school property tax by a set amount that varies by school district — typically between $25,000 and $50,000, though some districts offer more. This means you pay tax on a lower value, which lowers your annual bill.

Homeowners age 65 or older can claim an additional exemption that freezes the school property tax value of their home at the level it was when they first claimed the age-based exemption. This means their school property tax bill cannot increase due to rising home values, though they still pay tax on the frozen amount. County and city taxes may still increase. To claim either exemption, you file a form with your county appraisal district, usually by April 30 of the year you want the exemption to take effect.

Disabled homeowners and surviving spouses of military members killed in action may also be may have access to to exemptions or tax deferrals. The specifics depend on your county and school district. Contact your county appraisal district to learn what programs are available in your area.

When property tax bills are due and how to pay

Property tax bills in Texas are due on January 31 of the year following the tax year. For example, tax on 2024 property value is billed in late 2024 and due January 31, 2025. Most counties allow you to pay in two installments — typically one due by January 31 and another due by June 30 — though some counties require full payment by the January important date. Check your tax bill or your county tax assessor-collector's website to confirm the payment schedule in your county.

You can pay by mail, in person at the county tax office, online through your county's website, or by phone. Some counties charge a fee for online or phone payments. If you do not pay by the important date, a penalty and interest accrue. If property tax remains unpaid for a long enough period, the county can place a lien on the property or sell it at a tax sale to recover the unpaid amount.

How Texas property tax compares to other states

Texas has no state income tax, which is a major difference from most other states. However, because Texas funds schools and local government through property tax instead, homeowners pay a higher property tax rate than the national average. The trade-off is that Texas residents do not pay state income tax on wages, while residents of states with income tax pay both income tax and property tax.

The effective property tax rate — the percentage of home value paid annually — is one way to compare tax burden across states. Texas rates are typically in the top tier nationally. However, the actual dollar amount you pay depends on your home's appraised value, your location within Texas, and which exemptions you claim. Two states with similar effective rates can feel very different depending on home prices in each state.

What happens if you do not pay property tax

If your property tax bill is not paid by the important date, your county assesses a penalty and interest. The penalty is typically 6 percent of the unpaid amount, plus interest that accrues monthly. After a certain period — usually around two years of nonpayment — the county can file a lawsuit to foreclose on the property or place it in a tax sale. At a tax sale, the property is sold to the highest bidder, and the proceeds go toward the unpaid tax, penalties, and interest.

If you cannot pay your full bill by the important date, contact your county tax assessor-collector's office. Some counties offer payment plans or deferrals for hardship situations. The sooner you contact them, the more options may be available to you. Waiting until after the important date makes it harder to avoid penalties and legal action.

Frequently Asked Questions

Can I deduct Texas property tax on my federal income tax return?

Yes, you can deduct property tax paid on your home as part of the state and local taxes (SALT) deduction on your federal return. However, the total SALT deduction is capped at $10,000 per year. If your property tax, state income tax, and sales tax combined exceed $10,000, you can only deduct up to that limit. Consult a tax professional about your specific situation.

What is the difference between appraised value and market value?

Appraised value is the county appraisal district's estimate of what your property is worth. Market value is what a buyer would actually pay for it. These are often different. Your property tax is based on appraised value, not market value. If you believe the appraisal is too high, you can protest it to the appraisal review board.

Do I have to pay property tax if I own land but do not live on it?

Yes. Property tax applies to all real property in Texas, whether you live on it or not. You cannot claim a homestead exemption on land you do not occupy as your primary residence, so the tax rate may be higher. Agricultural land may be taxed at a lower rate if it is actively used for farming or ranching and you explore for agricultural exemption.

What happens to property tax if I sell my house?

The seller and buyer typically split the property tax bill for the year of sale, with each paying tax for the months they owned the property. The exact split is negotiated between buyer and seller or handled by the title company at closing. The new owner becomes responsible for property tax starting in the following year.

Can property tax go down if my home value decreases?

Yes. If your home's appraised value decreases, your property tax bill should decrease as well. However, you may need to file a protest with the appraisal review board to get the appraisal lowered. The appraisal district does not automatically lower values; you must request a review if you believe the appraisal is too high.