//How Taxes in Texas Compare To Other States

How Taxes in Texas Compare To Other States

Let’s face it, no one wants to pay taxes. And we certainly don’t want to hear there are states with low property tax rates compared to our own. But when it comes to taxes, it’s important to look at the whole picture. Sure, Texas taxes compared to other states might seem higher, but we don’t pay income taxes or vehicle property taxes like other states do. And we know our property taxes are going for crucial services, like road management, public safety, public schools and libraries in your local city or community. No one denies these services need to be funded by the people. But how does the tax we contribute compare to our neighbors in other states? What about states that rely on income tax vs. property tax? We’ll do a property tax comparison and address some of the concerns people have with the Great State of Texas and how we manage our property taxes.

How Much Are Taxes In Texas?

Property taxes in Texas are calculated based on the county you live in. The average property tax rate in Texas is 1.80%. This is currently the seventh-highest rate in the United States. Breaking this out in dollars, if your home is valued at $200,000, your personal property taxes at the average rate of 1.80% would be $3,600 for the year.

Who Sets The Appraisal Value For My Property?

The value of your home is based on the appraisal of a tax assessor. Your local government hires the assessor, who bases the value of your home on similar homes in your area. You can get some idea of your home’s value just by seeing what other houses in your neighborhood are selling for. This is one of the factors an assessor may use to value the property in your area.

Who Can Get A Special Appraisal For Their Property?

If you own land used for farming, agriculture or timber, you can apply for a special appraisal based on the value of the livestock, crops or timber the land produces. This may result in a lower appraisal that reduces the amount you owe.

Which Counties Have The Lowest Property Taxes In Texas?

Each county in Texas is responsible for setting its own property tax rates, resulting in taxes in Texas that vary across the state. When you compare property taxes with other counties, keep in mind that, typically, counties with low property taxes have smaller populations. As of 2020, the five counties with the lowest property tax rates in Texas were:

  • Borden (.34%)
  • Ward (.51%)
  • Glasscock (.55%)
  • Kenedy (.73%)
  • Crockett (.80%)

How Do Property Tax Comparisons By State Play Out?

Property taxes across the US vary quite a bit. When you compare property taxes by state, there are many factors to take into account. Unlike Texas, most states must pay income tax, so while they may pay less in property taxes, they make up for it in income tax or through other means. Of the 50 United States plus the District of Columbia, the following are the five states with the lowest property taxes:

  • Hawaii (.28%)
  • Alabama (.41%)
  • Colorado (.51%)
  • Louisiana (.55%)
  • District of Columbia (.56%)

You may look at those numbers and wonder why these states have the lowest property tax percentage. Let’s take a closer look. For example, while Hawaii has the lowest rate, they also have the highest state median home value at $615,300. And, unlike Texas, Hawaiians have to pay state income tax.

Which States Pay The Highest Property Taxes?

Now let’s compare property taxes with the five states that have the highest rates:

  • New Jersey (2.49%)
  • Illinois (2.27%)
  • New Hampshire (2.18%)
  • Connecticut (2.14%)
  • Vermont (1.9%)

Not only does New Jersey have the highest property tax, but its state median home value is pretty hefty, too, at $335,600. And they pay state income tax.

What Other States Pay No Income Tax?

In addition to Texas, eight other states refrain from collecting income tax:

  • Alaska
  • Florida
  • Nevada
  • New Hampshire (they are taxed on interest & dividends)
  • South Dakota
  • Tennessee
  • Washington
  • Wyoming

Of these states, only New Hampshire has a higher average property tax rate than Texas.

What Other States Have Property Tax Rates Similar To Texas?

The following states typically have a property tax rate that’s comparable to Texas:

  • Vermont
  • Nebraska
  • Connecticut

How Bad Are The Overall Taxes In Texas?

It’s worth noting here that taxes in Texas may not be as bad as you think. In a report by the Tax Foundation, Texas, with a tax burden of 7.6%, ranked 47 out of 50 states. Excluding property tax, here are the taxes being collected in Texas:

  • Franchise Tax: Some wholesalers and retailers are required to pay a franchise tax of 0.375%. For other non-exempt companies, the rate goes up to .75%. This franchise (or “privilege”) tax is based on total business revenues of over $1.18 million.
  • Sales Tax: You will pay 6.25% taxes in Texas for everything you buy except groceries and medication. Some localities add their own tax onto this, which can raise the sales tax to as much as 8.25%.
  • Other Taxes: The gasoline tax is 20¢ per gallon. Cigarettes will set you back $1.41 per pack. And hotels charge 6% of the price of your accommodations.

Not only does New Jersey have the highest property tax, but its state median home value is pretty hefty, too, at $335,600. And they pay state income tax.

Who Benefits by Having No Income Tax & High Property Taxes?

Business owners and high-wage earners are the ones who benefit most by having no income tax and higher sales and property taxes. More of the burden is placed on the poor, especially those living in low-income housing.

What If You Need Help Paying Your Texas Property Taxes?

Of course, if you currently have a low income, the fact you’re not paying income tax is cold comfort. As the cost of basic essentials rises but your household income does not, you may wonder how you’re going to pay your property taxes.

Before you panic, find out if you’re eligible for one of six Texas property tax exemptions. If you’re over 65 or disabled, check with your tax preparer to see if you qualify. You could save a significant amount of money and discover you’re able to manage your taxes in Texas.

If you’re not exempt and in danger of becoming delinquent on property taxes in Texas, you could incur debilitating fees and interest. Help is available with property tax assistance from Tax Ease.

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After you fill out an application with Tax Ease, the process is fast and easy. We’ll pay off your Texas property taxes right away, and you can pay us back on a schedule that works for you! Contact us today to see how we can help.
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