Understanding Texas Property Taxes

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There was a time when property taxes did not figure very prominently in the revenue treasury managed by the Texas Comptroller of Public Accounts. When the American real estate market entered a bonanza period in 2001, metro housing markets such as Dallas and Austin saw strong appreciation of home values; as a result, property taxes have become a priority for the Texas Comptroller and for the economy of the Lone Star State.

As the situation stands in 2018, homeowners in Texas pay some of the highest property taxes in the United States. On average, residential property in Texas is taxed slightly below two percent on an annual basis; for example, in the Austin real estate market, the owner of three-bedroom townhouse assessed with a value of $300,000 would receive a tax bill higher than $5,900 if no exemptions are claimed. Only a few states impose higher property Taxes than Texas, with New Jersey being the highest in 2018; however, it should be noted that workers in the Lone Star State are not subject to income taxation.

The base calculation of property taxes in Texas involves adding up the values assessed for the land and the structure. These values are declared by the county assessor after January 1, and they are valid through December 31. Once both values are added up, the applicable exceptions must be subtracted before the property tax rates can be applied.

The property tax rate in Texas is set in accordance to section of 26.16 of the Property Tax Code, which means that assessments are split into appraisal districts in each county. For the example below, the Oak Creek Metro Park appraisal district will be used:

Land and Tax Value: $300,000

Exemption: Homestead

There are various property tax exemptions to benefit the diverse homeowner population of Texas. The homestead exception is pretty much standard for owner-occupied residential properties; one of the highest exemptions is for Texas residents who are disabled veterans over the age of 65.

To effectively apply the homestead exemption, homeowners must be familiar with how much the various tax units in their appraisal district will credit. In this particular case, the Oak Creek Metro Park district makes the following allowances:

Travis County $60,000
Travis Central Health $60,000
Austin Community College $5,000
City of Austin $24,000
Austin ISD $25,000
Onion Creek Metro Park District $0.00

Before applying the effective rates of the tax units above, the exception should be subtracted from the $300,000 assessed value:

Tax Rates

Travis County – 0.369000 $886
Travis Central Health – 0.107385 $258
Austin Community College – 0.100800 $297
City of Austin – 0.444800 $1,228
Austin ISD – 1.192000 $3,278
Onion Creek Metro Park District – 0.200000 $600

Estimated annual tax: $6,546

Although Texas property taxes can be calculated with pencil and paper, most homeowners will at least use a calculator or Microsoft Excel; the best way to estimate taxes is to visit the websites of the county assessors and use their various online tools.

Property tax relief for Texas homeowners is not expected to take place in 2018. In 2017, Governor Greg Abbott proposed an overhaul of state taxation, but the legislature did not act upon his proposal.