Texas property taxes play a critical role in funding local government services, including schools, public safety, and infrastructure. As a homeowner, understanding how property taxes are determined and administered can empower you to manage your obligations effectively and take advantage of available exemptions.
1. What Are Property Taxes?
Property taxes in Texas are “ad valorem” taxes, meaning they are based on the value of your property. Each year, local governments levy these taxes to fund essential services such as schools, roads, and public safety.
2. Who Sets and Collects Property Taxes?
Texas does not have a state property tax. Instead, local taxing units—counties, cities, school districts, and special districts—set tax rates and collect property taxes. These entities work with appraisal districts that assess the market value of your property to calculate the tax you owe.
3. How Are Property Taxes Calculated?
The amount of property tax you owe is determined by multiplying the taxable value of your property by the tax rate set by your local taxing units:
Property Tax = Taxable Value X Tax Rate
- Taxable Value: This is the market value of your property minus any applicable exemptions.
- Tax Rate: Expressed per $100 of assessed value, this rate is set annually by local governing bodies.
4. The Property Tax Process
The property tax process in Texas follows a yearly cycle:
- Appraisal: The local appraisal district determines the market value of your property.
- Equalization: You have the right to protest the appraised value if you believe it is incorrect. This is done through the Appraisal Review Board (ARB).
- Tax Rate Setting: Local taxing units adopt tax rates based on their budgets and public input.
- Billing and Collection: Tax bills are mailed, and payments are due by January 31 of the following year.
5. Exemptions and Tax Relief
Texas law provides several property tax exemptions to reduce your taxable value:
- Homestead Exemption: Available to homeowners on their primary residence, reducing the taxable value of your property.
- Over-65 or Disabled Exemption: Offers additional relief to senior citizens or those with disabilities.
- Veterans’ Exemption: Provides tax relief to qualifying veterans.
6. Protesting Your Property Tax Appraisal
If you believe your property has been overvalued, you can file a protest with the Appraisal Review Board. Common protest reasons include:
- The value is too high compared to comparable properties.
- The property was appraised unfairly.
7. Recent Reforms in Texas Property Tax
The Texas Property Tax Reform and Transparency Act of 2019 introduced changes aimed at transparency and limiting tax increases. Key highlights include:
- Tax Rate Caps: Limits tax revenue growth for most taxing units to 3.5% annually without voter approval.
- Enhanced Transparency: Taxing units must provide detailed notices about proposed rates and their impact.
8. Tips for Homeowners
- Check Your Notice: Review the appraised value notice from your appraisal district.
- File Timely Protests: Protest by the deadline if you disagree with your property valuation.
- Apply for Exemptions: Ensure you file for all exemptions for which you qualify.
- Budget for Taxes: Remember that property taxes are due annually, typically by January 31.
For more information, visit your local appraisal district’s website or consult a Slash Tax tax consultant for personalized guidance.