Texas property tax law changes every few years. See the latest posts for the most up-to-date information.
Texas’s policies allow for many individual freedoms, and many Texans wouldn’t have it any other way. One popular right is that Texans enjoy earning income without paying an individual state income tax; this freedom only exists in eight other states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Washington, and Wyoming.
However, because local and state government bodies need funding, Texas has a higher than average property tax, at an average percentage of 1.69 compared to the national average of 1.07%. When you own your own home, paying this high of a tax can feel unfair and far too burdensome. But as a homeowner, you also have multiple avenues to reduce your property tax bill.
Contesting your property taxes, applying for exemptions, and using a clever strategy of both approaches can drastically shrink your property tax bill this year and in future years. Here, we’ll explore your obligation to pay Texas taxes and four rights you have that can reduce that obligation.
What Are Property Taxes in Texas?
Property taxes are regressive taxes that local governments calculate, collect, and enforce. While property owners pay taxes on a wide range of property types, including cars and boats, ‘property taxes’ generally refers to land and structures owned by individuals or corporations. Local city or county governments levy taxes on properties within their limits to pay for city- or -county-funded projects, including:
- Libraries
- Schools
- Road and highway maintenance or construction
- Law enforcement and fire protection
- Water management services
Local governments calculate the property tax an individual owns by calculating two general amounts:
- The assessed value of the property includes the value of the land and any structures on the ground. County or city assessors assess the property’s value once every one to five years, typically using a sales evaluation, cost method, or income method.
- The tax millage combines the total value of taxes owed for all of the jurisdictions related to the property.
For example, you may have a residential property in Texas that the county assessor determines has a value of $400,000. If your property is obligated to pay a 2% total tax, your property tax bill is $8,000 for the year. As a general property owner, there is very little you can do to adjust the tax percentage due. However, there are multiple ways you can affect your property’s assessed value and the portion of that assessed value that can be taxed.
Do You Have to Pay Your Property Taxes in Texas?
Before we discuss how to lower your property taxes, it’s essential to understand your obligations. Residents have until January 31st to pay their tax bill without penalties or late fees. Most counties allow for online payment, though they also provide wire transfer and mail-in options. A lot of homeowners also have escrow accounts through their mortgages, and the lender will coordinate with the county to manage the payment of taxes due from the escrow account.
If the taxes are not paid in full by January 31st, you will owe a delinquency tax starting on February 1st, the delinquency date. The only exceptions are for property owners who qualify for exemptions and adequately notified the county that they will pay their property taxes in three installments (due January 31st, March 31st, and May 31st).
What Happens If You Don’t Pay Your Property Taxes
Property taxes are considered delinquent on February 1st, and delinquent property owners will pay an additional 2% penalty on top of the taxes each month the taxes are late. If you continue to not pay your taxes past July 1st, you will also owe a 20% collection fee.
Even worse, the county or city will place a tax lien or holds on your property, which makes the property collateral until your taxes are fully paid. If you have been delinquent for 60 days or more, the government can foreclose on your home (even if you own it outright), and only a judge can halt the foreclosure process.
If you feel the property taxes you are required to pay unfair, the best way to resolve the issue is to protest your property taxes. Every county has a documented process that homeowners can follow to contest the assessed value of their home by meeting with a county representative, having an informal hearing, and having a formal hearing in front of the appraisal board. This process can lower your total tax bill if the parties involved agree that the tax bill is unfairly high. Simply refusing to pay the taxes — in whole or part — will not resolve the issue.
Now that we’ve examined property taxes and your obligations to pay them, let’s take a closer look at some of the rights Texans have that can reduce their property tax obligations.
Related: A Quick Guide to Homeowner Taxes in Texas
Your Right to a Homestead Exemption That Exempts Some of Your Property and Caps Tax Increases
Individuals with an ownership interest in residential property and living in a given property as their primary residence can file a general residence homestead exemption. There are two key benefits of exercising this right:
- School districts provide a $40,000 exemption, and local taxing units can adopt additional exemptions of less than $5,000 and no more than 20% of the property. This lowers the ‘taxable’ portion of your property’s assessed value, directly lowering your tax bill.
- You will be able to institute a homestead cap. The annual increase in property value cannot exceed a 10% growth over the previous year’s assessed value (aside from increased value due to improvements). For example, if the county assessed your home at $250,000 in Year 1 and you didn’t make any improvements, it cannot be evaluated at more than $275,000 in Year 2.
The benefit of the homestead cap grows more valuable every year. Continue the math: in Year 3, your property can’t be assessed for more than $302,500 and no more than $332,750 in Year 4. Owners will find this particularly valuable in a high-demand market like DFW, Austin, or Houston. Imagine that you didn’t file a homestead exemption and your area saw a 15% increase in assessed values. Those years would look like this:
- Year 1: $250,000
- Year 2: $287,500
- Year 3: $330,625
- Year 4: $380,218.75
That’s a difference of $47,468.75 over four years. If you take Texas’s average tax percentage rate of 1.69%, you’ll save $802.22 in taxes in Year 4 just by filing for this exemption.
Related: Understanding Your Texas Property Tax Bill
Your Right to Exemptions as a Disabled Veteran or Surviving Spouse
Veterans who became disabled during or as a result of their military service are entitled to an exemption on their property taxes. Surviving spouses and unmarried, underage children of disabled veterans or veterans who died during active duty may also receive property tax breaks. There are different disability ratings established by the Veteran’s Administration or the military, and this rating determines your applicable exemption from property taxes.
According to the Travis County Tax Office, “In Texas, veterans with a disability rating of:
- 100% are exempt from all property taxes
- 70 to 100%: receive a $12,000 property tax exemption
- 50 to 69%: receive a $10,000 property tax exemption
- 30 to 49%: receive a $7,500 property tax exemption
- 10 to 29%: receive a $5,000 property tax exemption”
Consult your county tax office officials to ensure you have the appropriate paperwork filed to maintain your property tax exemption.
Your Right to Exemptions and Deferments as a Senior Resident
If you are 65 years old or older or if you have a disability, your school district levy must account for a $10,000 residence homestead exemption. This exemption only applies to individuals who own the property and live in it as their primary residence. Seniors can also qualify for a standard homestead exemption and this protected exemption. Some taxing districts may provide an additional exemption of between $5,000 and 20% of the property’s assessed value. Under Section 33.06 of the Texas Tax Code, seniors can also defer property tax payments until death (when the taxes are levied against their estate).
These exemptions reduce the taxable portion of your property. For example, if you have a home assessed at $250,000 and receive $35,000 in senior exemptions, you will only be taxed as if your home’s value is $215,000.
Your Right to Protest Your Property Assessment and Property Taxes
You can also more directly fight against a tax bill you think is unfair by protesting your property taxes. If the county values your home as being $200,000, but you firmly believe your property is worth $150,000, you can file a protest through your county, provide evidence, and offer that counter assessment of $150,000. Your county may reduce your assessed value to meet you in the middle.
You can reject this counteroffer and schedule an informal meeting with a county representative or accept the offer. During the subsequent informal discussion and a third stage — a hearing in front of the appraisal review board — you can make the case that the assessed value of your property is inaccurate and too high.
Home Tax Shield Is Here to Help You Protest Your Texas Property Taxes and Protect Your Right
Filing exemptions, protesting your property taxes, and managing the entire process of the protest can be cumbersome and time-consuming. At Home Tax Shield, we’re here to help you uphold your right to a fair property tax bill. We can file your protest and represent you at meetings and hearings by providing evidence your assessed property value should be lower and fight for a lower property tax bill for you. Sign up today to get started.