Texas property taxes are a major expense for homeowners, landlords, and business owners. Yet many people never get a clear explanation of how their tax bill is actually calculated.
The truth is, the process is much simpler than it looks. Once you understand the steps, you can better evaluate your appraisal and decide if you need to file a property tax appeal in Texas.
Here is the plain English guide on how property taxes are calculated in Texas.
Every property tax bill in Texas is based on this basic equation:
Property Value × Tax Rate = Property Tax Bill.
Each county in Texas has a local Appraisal District. Its job is to estimate the market value of every property as of January 1 each year. Market value means what the property would likely sell for on the open market.
Appraisal districts use mass appraisal methods, looking at::
In the spring, property owners receive a Notice of Appraised Value showing the district’s estimate.
For residential properties, certain exemptions can reduce how much of the property is taxed.
Common exemptions include:
How much does the homestead exemption save in Texas?
This is one of the most common questions we hear. While the exact amount depends on your local tax rate, a homestead exemption generally lowers your taxable value by $100,000 for school district taxes.
For Example:
Taxes are calculated on the taxable value, not the full appraised value.
Commercial properties generally do not receive exemptions like homesteads, but they may benefit from other protections.
If you have a homestead exemption, Texas law limits how much your taxable value can increase each year. This is called the 10% homestead cap.
Your taxable value cannot increase by more than: 10% per year, plus the value of any new improvements.
Example:
Even if the market value jumps to $260,000, your taxable value would still be capped at $220,000 for that year.
Commercial and income-producing properties do not qualify for the homestead cap. However, Texas law now provides a similar protection known as the circuit breaker limitation.
This rule applies to certain non-homestead real property, including many commercial properties.
The circuit breaker limits how much the appraised value of qualifying commercial property can increase each year.
Example:
Even if the market value jumps to $1,500,000, the appraised value would be limited to $1,200,000 for that year.
This provision helps create more predictable tax bills for business owners and investors.
Property taxes in Texas are local. That means your tax bill is made up of several different taxing entities.
Common taxing units include:
Texas property tax rates by county vary significantly. While there is no state property tax, the average total rate usually hovers around 1.8% to 2.5% depending on where you live.
Example:
Total tax rate: 2.00%
Once the taxable value and total tax rate are known, the calculation is straightforward.
Example:
$300,000 × 0.02 = $6,000 annual property tax bill
Tax bills are typically mailed in October, and payment is due by January 31 of the following year.
Property taxes follow the same general timeline each year:
January 31: Payment deadline
If you believe your property value is too high, you have the right to fight it. Learning how to lower property taxes in Texas often comes down to one action: Protesting your appraised value.
Appraisal districts use mass appraisal methods, which can sometimes lead to inaccurate values.
You may want to protest if:
Both residential and commercial property owners have the right to protest their appraisal each year.
Texas property taxes come down to three main factors:
Once you understand those pieces, the system becomes much easier to navigate—and challenge when necessary.
If your property value seems too high, you don’t have to handle the protest process alone. PropertyTaxes.Law can analyze your property value, gather supporting evidence, and represent you in the protest process. Even a small reduction in value can lead to meaningful savings on your annual tax bill. Please contact our team today at 832-919-8800 to see how we may be able to help.
The savings vary by tax rate, but the general homestead exemption currently lowers the taxable value of your home by $100,000 for school district taxes. This can result in hundreds or thousands of dollars in annual savings.
You qualify if you own the home and it is your principal residence on January 1st of the tax year. You must apply with your local county appraisal district to receive the benefit.
Because Texas has no state income tax, property taxes in Texas are generally higher than the national average to fund local services and schools. However, exemptions and caps help manage the cost.
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