Homeownership in Texas comes with some substantial expense. Alongside routine maintenance costs, mortgage payments, and homeowners insurance, annual property taxes can take a big chunk of your income. The absence of state taxes and increasing home values due to Texas’ exploding real estate market contribute to the high property taxes. Texas residents pay an average of $3,520 each year, making it the country’s sixth-highest paying state in real estate property taxes.
Indeed, property taxes have risen more than 20% in the past five years, and many property owners are wondering how they can cut costs. While the homestead exemption is an obvious way to save, there are other steps you can take to reduce your tax bill. By applying for all the exemptions you’re eligible for, including some lesser-known options—and by protesting your property’s appraisal value—you can remove a portion of your home’s value from taxation and lower your property tax bill.
What Are Property Tax Exemptions?
Property tax exemptions are provisions that remove a percentage of your property’s value from taxation. If you’re eligible, these exemptions are the most effective and simple way to lower your tax obligations. Exemptions can work by changing how your property value is assessed or exempting part of your property from a percentage of your tax rate.
Texas property taxes are calculated by assessing your property’s value and then multiplying that value by your county (or other tax jurisdiction) tax rate. However, it’s often more complicated than simply multiplying those two values—the county tax rate is composed of many different numbers. Your total county tax rate of 3%, for example, might be composed of a 1.5% school district tax rate, a 0.75% city tax rate, a 0.5% county tax rate, and a 0.25% community college tax rate.
Let’s consider a $300,000 house in this district. The total tax bill is $9,000 (because $300,000 * 0.03 = $9,000), but its breakdown would look like this:
- School district tax bill: ($300,000 * 0.015) = $4,500
- City tax bill: ($300,000 * 0.00750) = $2,750
- County tax bill: ($300,000 * 0.0050) = $1,500
- Community college tax bill: ($300,000 * 0.00250) = $750
This breakdown is an important part of how partial exemptions are calculated. For instance, the general residence homestead exemption now protects $100,000 of a qualifying homeowners’ assessed property value from school district taxes, applying the school district tax to the remaining amount. The other elements of the tax are assessed as normal.
Related: What Is a Homestead Exemption in Texas?
Lesser Known Tax Exemptions in Texas
While the general homestead exemption is the most well-known and commonly used property tax exemption, it’s not the only one available to help Texas property owners reduce their tax bill. If you meet certain qualification requirements, you may be able to use one or more of these lesser-known property tax exemptions to lower your property tax bill.
1. The Texas Agricultural Property Tax Exemption
If you have land primarily used for agricultural purposes (or, in some cases, if you have wildland), you may be eligible for an ag exemption. The Texas Agricultural Property Tax Exemption changes how your county or other tax jurisdiction evaluates your property. Instead of measuring its market value, the assessor determines the property’s productivity value, an amount that tends to be much lower.
Eligibility requirements for an agricultural exemption can be complex and vary across different counties. Some of the general conditions you can expect include:
- Having at least 10 acres of agricultural land
- Proof that the land has been primarily used for agricultural purposes in at least five of the last seven years
‘Agricultural purposes’ can be defined broadly or narrowly depending on the county, but some of the most common agricultural purposes include beekeeping, crop production, and keeping livestock. Qualifying livestock types include bees, cattle, goats, and sheep. Chickens or fish may also be a qualifying type of livestock, but special requirements apply. Cutting timber, raising exotic animals, and participating in qualifying crop rotation programs can make your land eligible for the exemption.
2. The Disabled Veterans and Surviving Spouse Exemption
If you are a veteran who is disabled, you may be eligible for a substantial property tax exemption. The amount of exemptions available for veterans and surviving spouses depends on a veteran’s disability rating.
Texas law provides a partial exemption (with the amount depending on disability rating) for any property owned by a disabled veteran. The surviving spouse of a deceased disabled veteran who remains unmarried, and surviving children, may also qualify for an exemption. In addition, a few other specific qualifications are worth noting:
- A veteran 65 or older with a disability rating of at least 10%, total blindness in one or both eyes, or loss of the use of one or more limbs may qualify for an exemption of $12,000.
- A partial exemption is available for a residence homestead donated to a disabled veteran, with the amount determined according to the percentage of the individual’s service-related disability. This exemption also extends to a surviving spouse who has not remarried.
- A disabled veteran rated 100% disabled due to a service-related disability is eligible for an exemption of the total appraised value of the veteran’s homestead. This exemption extends to a surviving spouse who was married to a disabled veteran who qualified for this exemption—or would have qualified if it had been in effect at the time of the veteran’s death.
3. The Over-65 Exemption
Seniors over 65 are eligible for additional property tax relief because they often live on a fixed income. Current Texas law requires school districts to provide an additional $10,000 residence homestead exemption.
To qualify for the over-65 exemption, a resident must:
- Be 65 or older
- Have an ownership interest in the property and live in the home as their primary residence
If the person age 65 or older dies, the surviving spouse may continue to receive the residence homestead exemption if they are age 55 or older at the time of death. However, the surviving spouse may need to reapply for the exemption.
4. The Surviving Spouses of First Responder Killed in the Line of Duty Exemption
A total property tax exemption is available for a surviving spouse of a first responder killed or fatally injured in the line of duty. This exemption applies regardless of the date of the first responder’s death. To qualify, the surviving spouse must not have remarried since the death of the first responder. If the surviving spouse qualifies a different property as a residence homestead, the same dollar amount of the former exemption is applied.
5. The Temporary Exemption for a Qualified Property Physically Damaged by Disaster
A property that is at least 15% damaged by a disaster in a governer-declared disaster area is eligible for a temporary exemption of a portion of the appraised value of the property. To be eligible, a property owner must apply for the temporary exemption within 105 days after the governor declares a disaster area.
Related: The Impact of Natural Disasters on Property Taxes in Texas
Qualified property must have sustained physical damage caused by the disaster. A damage assessment rating of Level I, II, III, or IV determines the percentage of the property value to be exempted. As a temporary exemption, it expires on January 1 of the first tax year in which the property is reappraised.
Why You Should Take Advantage of Property Tax Exemptions to Lower Your Property Taxes
Property tax exemptions are helpful tools for ensuring you’re only paying your fair share of property taxes rather than overpaying. Applying for any exemptions your property may be eligible for keeps your property correctly categorized by the county and ensures that even steep rises in your county’s tax rate are tempered.
The appraisal value of your property can increase year-over-year, but tax exemptions can cap this increase—saving you hundreds, or even thousands, over the years. For example, if you have a homestead exemption, your tax appraisal district can’t raise your assessed value by more than 10%. If you qualify for multiple exemptions, you can reduce your tax bill even more.
Want to Lower Your Property Taxes Even Further? Protesting Your Property Taxes Can Help
Exemptions aren’t the only way to lower your total property tax bill. Tax rates are only one half of the equation that determines your annual property taxes. Your property value is also an important component. This value is determined by an assessor and can be adjusted in some situations.
If you think the county assessor’s value is incorrect — for example, if they valued your property at $350,000 when you believe it should be $275,000 — you can file a Formal Protest Form with the county. In this process, you’ll submit your counter-valuation and any supporting documentation you have.
This can include the property values of comparable homes in your neighborhood, estimates from contractors regarding upgrades or repairs your home needs, and more. The county will then respond to your protest with an adjusted property value (which you can continue to appeal) or schedule a series of informal and formal hearings where you can present your case in more depth.
While protesting property taxes is a right that every Texas homeowner has and should exercise, it can be complex and time-consuming. Many homeowners choose to protest with the help of a tax service that represents them throughout the appeal process and completes all the necessary steps for a successful protest—from beginning to end. When paired with the right exemptions, protesting your property taxes is an effective way to keep your tax bill as low as it can be, year after year.
Lower Your Property Taxes with Exemptions and a Successful Protest
Applying for property tax exemptions is the first step to lowering your taxes. Equally important is protesting your taxes to ensure the appraised value of your home is accurate and fair. But protesting your property taxes takes time. If you don’t have the time or knowledge to manage the process but don’t want to miss a savings opportunity, Home Tax Shield is here to help. We work with property owners across the state to help them get a fair property assessment and reduce their property tax bill. Sign up today to get started and see if you can lower your property taxes in the new year.