How Much Are Property Taxes in Texas?
Texas property taxes are high — some of the highest in the country. Usually, the average effective real estate property tax rate falls between 1.62% and 1.83%, much higher than the national average of 1.08% for property taxes. Texas does things bigger, after all! In terms of a dollar amount, the average amount paid per year is nearly $3,500 for a home valued at $185,000. However, your exact bill is based on the tax rate set by your county and the value of your home or commercial property.
How Do Local Taxing Authorities Determine the Tax Rate?
The way property taxes are calculated in Texas determines the final bill you receive. Your home’s value is determined by the appraisal of a tax assessor working for the local government. The assessor will look at similar homes in the area in making the final determination. This appraised value is then multiplied by the county or school district’s tax rate to calculate the number that appears on your bill. Those who own land used for agriculture, timber or farming of any kind can apply to get a special appraisal based on the value of the crops, livestock or timber they produce, which could result in a lower appraisal and reduced bill.
Are Texas Property Taxes Bad?
While the exact rates for Texas property taxes fluctuate over time, they’ve remained pretty consistently high. In fact, Texas usually ranks as a top-ten state for the highest real estate property tax rates. Is that a bad thing? Ultimately, it depends on how you look at it.
The main reason property taxes in Texas are so high is because it is one of only seven states that do not impose a statewide personal income tax. The others are:
- South Dakota
These states, especially their counties and local governments, still need tax dollars for essential services and necessities. Texas does this through high property taxes imposed by local taxing authorities.
When determining how tax-friendly Texas is, there are other factors and regulations to consider:
- There is a so-called franchise tax on certain wholesalers and retail businesses (the typical tax rate is .375% to .75% for any profit exceeding a total of $1.13 million).
- There is (currently) no inheritance or estate tax.
- State sales tax is 6.25%, and local governments can add to it.
- Certain things like fireworks, gas, cigarettes and hotels have an additional tax.
Also, even if your county tax rate doesn’t increase, your personal bill could if you make additions or improvements to your home, thereby increasing its value. Furthermore, Texas property taxes generally only apply to real estate — other forms of personal property, including vehicles, are usually only subject to taxation if they contribute to your income.
Good or Bad — Depends on Your Perspective
Compared to other states, Texas is often considered relatively tax-friendly because it has a lower overall tax burden (mostly due to the lack of income tax). However, the state still relies on sales and property taxes, making the burden for those higher than average — something that may disproportionately affect certain people and industries.
In weighing the difference between states that rely on income tax vs. property tax, there are some general patterns to consider. Having no income tax (and higher-than-average property and sales tax) typically benefits business owners and high wage earners, but places more of a burden on lower-income families and the poor, including those in low-income housing. There’s also the underlying philosophical perspective — those who prefer a lack of government intervention and are in a high-income bracket tend to prefer a state like Texas with no income tax. In contrast, those who feel the government should have a more active role in shaping economic policy tend to prefer income tax-based states. Again, these are generalizations, but they’re certainly worth considering.
Where are the Lowest Property Taxes in Texas?
Since every county sets its own tax rate, Texas property taxes vary across the state.
As of 2019, the lowest property taxes in Texas are in these five counties:
- Kenedy County
- Borden County
- Ward County
- Kent County
- Terrell County
The average effective property tax rates in these counties range from .34% to .94%. Generally, these areas have lower populations.
How Do Texas Property Taxes Compare Across the Country?
Different states handle high property taxes in different ways. Below are a few comparisons to consider.
States that Have Similar Property Tax Rates to Texas
The following states usually rank as having effective real estate property tax rates that are comparable to Texas:
States with the Lowest Property Tax Rates
Each state listed below is consistently ranked as having some of the lowest tax rates in the country, significantly lower than Texas:
States with Higher Property Tax Rates than Texas
While it’s typically in the top ten, Texas is not the state with the highest property tax rates. The following are almost always higher:
- New Jersey
- New Hampshire
As a point of comparison, New Hampshire makes up for its high property taxes by having no sales tax. Texas, of course, has high sales tax but no income tax.
Another point to note is how median home values impact property taxes. For instance, New York and Massachusetts both have relatively high property taxes simply due to high median home values rather than high property tax rates. Likewise, California has a low property tax rate, but since there is a significantly higher median home value, local governments are still able to gain a significant amount of revenue from property taxes.
What if You Have Trouble Paying Texas Property Taxes?
If you need property tax assistance, there are a couple of key ways to get it.
The most common way to lower your tax bill is through an exemption. There are six types of property tax exemptions in Texas, but most aren’t accessible for the average resident. Of these, a homestead exemption is the easiest to obtain, requiring that you live on the land or property being taxed. You can also seek an appeal, but the process is often lengthy, requiring court battles and legal fees.
If you’re facing delinquency, you may need a faster solution. Delinquent property taxes in Texas come with a plethora of fees and high interest rates. To take care of the problem as quickly as possible, you’ll need a loan.