Homeowner calculating taxes

Texas Property Tax Code Basics and Changes

Property Management Tips

One of the most important parts of being a homeowner is being prepared. Said succinctly by Benjamin Franklin, “Failing to prepare is preparing to fail.” This means having emergency funds for problems that can arise, having the right insurance, and setting aside funds for taxes. If you just bought a home in Texas, you might be wondering how much you should I expect to pay. While there is no state-wide property tax in the state of Texas, there are various local taxes to take into account. We’ll go over these in more detail below, as well as important changes that have taken place recently.

How Texas Property Taxes Are Administered

Since Texas has no property tax on the state level, these taxes are administered by the local government, municipal, county and school. The state decides the limits for these local taxes. In Lockhart, for example, the municipal rate is .73%, the school rate is 1.33%, and the county rate is .78%, coming out to a total of 2.83%. In Kyle the municipal tax rate is .54%, the Hays CISD tax rate is 1.54%, and the county rate is .45%. These rates are taxed at, for example, $2,830 per $100,000 in Lockhart.

Recent Changes to Texas Property Taxes

There have been some changes in how these tax rates are decided in recent years. For example, the revenue cannot be increased beyond 3.5% year over year for any category. Any city looking to increase beyond this point will need to get approval from the voters. This and other changes were made by Senate Bill 2 in 2019. If a city is experiencing a disaster or has a disaster declared, then they can return to the old system that allows up to a 8% change. This is following a general trend of reducing property tax rates, and even cities like Austin have seen a reduction in recent years.

How Texas Property Taxes are Determined

One thing important to understand about Texas property taxes is that they are based on your home’s assessed value. The assessed value is decided by your county’s government tax assessor and has nothing to do with a physical home inspection. A home’s assessed value will typically take any upgrades done recently on the home into account as long as they needed approval from the city/county. The tax assessor starts with the market rate and comes up with a rough assessment of current property worth taking the following factors into account:

  • Any upgrades to the home
  • Sales of comparable homes
  • Replacement cost
  • Any income derived from rentals
  • Inflation over time

These assessments can be challenged by filing a petition with your local tax assessor’s office and filling out the form answering questions on why the assessment was inaccurate.

Property Tax Exemptions in Texas

There are a wide variety of exemptions that Texas homeowners can take advantage of that we have covered in a previous article. These are generally somewhat uniform across the state, but they will vary and need to be applied for at the local level. One problem this can cause is that someone might have been able to afford their $100,000 home 20 years ago, but they might be drowning in property taxes now if their home’s assessed value has risen well above $500,000. This is when it might be time to rent, to think about downsizing, or to look into common exemptions.

Hopefully some of the basics surrounding recent property tax code changes and the basics have been answered for you today.

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