Texas property tax law changes every few years. See the latest posts for the most up-to-date information.
Property tax season is right around the corner, and that brings anxiety for a lot of homeowners who aren’t sure how they’re going to tackle the large tax bills coming their way each year. Be strategic about your taxes by proactively considering tax relief strategies, exemptions, and other strategies for lowering the amount you have to pay by January 31.
In this guide, we’ll explore some of the most popular approaches for reducing how much your property can be taxed by school districts, how you can plan payments for the best results, and the process for protesting your official property tax bill.
What Forms of Texas Property Tax Relief Are Available?
Even before the sudden surge in property tax bill sizes, Texas has established several different pathways for property owners to seek property tax relief. Each county manages its own taxes, establishing its own tax rates, norms, and specific process details for getting different types of relief.
That said, most residential property owners can consider multiple different routes for pursuing tax relief, and you can use many of these strategies simultaneously. Some of the most popular strategies for Texas property tax relief are:
- Property Tax Exemptions: Based on your age, disabilities, veteran status, and whether you primarily reside at the property in question, you may be eligible for a variety of property tax exemptions. These provisions remove, or shelter, a portion of your property’s value from the property tax calculations to reduce the total amount due.
- Protesting Your Property Taxes: If you receive your tax bill and you believe the amount is incorrect, you can file a formal protest through your county appraisal district. By providing evidence about what you believe to be the more accurate property valuation assessment, you can lower your home’s assessed value and proportionally reduce your tax bill.
- Property Tax Deferrals: Some homeowners can defer their property tax bills to following years or indefinitely under the terms of a deferral agreement.
- Discounts: Taxing units can set up discount programs for up to a 3% discount on property taxes due. However, this is at the discretion of your county.
- Payment Plans and Payment Installments: Just like with federal income taxes, individuals have an option to sign up for a payment plan (provided you sign up in time). Qualifying individuals can pay their taxes in two or four installments based on the specific program being used.
- Using an Escrow Account: Many homeowners with a mortgage already have an escrow account set up. Under this arrangement, your lender sends you a monthly bill composed of your actual mortgage payment (comprised of your principal and interest payment), house insurance payment, and a twelfth of your estimated annual property tax bill amount. Your lender then holds the property tax portion of your payment in an account and pays your property taxes on your behalf from the collected amount. While this doesn’t change the total amount you owe, it does provide relief by allowing homeowners to budget throughout the year instead of facing one large lump sum due.
Each of these measures can help reduce the strain of paying your Texas property taxes in January. Now that you’ve looked over the basics of each strategy, keep reading to learn more about each approach and how to get started.
Property Tax Exemption in Texas
Tax jurisdictions use a lot of different calculations to determine your final tax bill. But they all boil down to this simple equation: [property value] times [tax rate] = [property tax bill]. A property tax exemption removes part of your property value from that calculation, so your total bill decreases. Different exemptions provide different degrees of relief. Consider these options:
General Resident Homestead Exemption
If you have 100% ownership of your home and it’s your primary residence, you can apply for a general residence homestead exemption. This exempts $40,000 from the school district portion of your property taxes (which is usually the largest individual levy making up your jurisdiction’s tax rate).
For example, if you have a $250,000 house and your school district tax rate is 2.21%, you can reduce that portion of your tax bill from $5,525 to $4,641. If you live in a county that collects taxes for flood control or for maintaining farm-to-market roads, you may receive a local $3,000 exemption.
Once you receive this exemption, it applies automatically to following years. Even better, the longer you have this exemption in place, the bigger the overall savings you receive. This is because a second benefit of the exemption is the cap on property value increases it places on your property.
Your property’s value can only increase an additional 10% each tax year, protecting you from sudden spikes in demand and resulting raises in property values. This won’t negatively affect the selling or market price of your home — it simply protects you from rapidly increasing tax bills.
Related: What is a Homestead Exemption in Texas?
Over-65 Property Tax Exemptions
If you or your spouse is over 65 years old, you can apply for this exemption on your primary residence. It adds another $10,000 exemption to the school district portion of your taxes. It also places a cap on how much school district tax you pay overall.
This benefit can transfer to subsequent primary residences if you move. Since 2005, county districts have automatically applied this benefit to qualifying properties provided the homeowner’s birthdate was included in a general residence homestead exemption.
Disabled Person’s Exemption
If you qualify for disability benefits under the Social Security Administration’s Federal Old-Age, Survivors and Disability Insurance Program, you automatically qualify for this exemption. Qualifying disabilities under other programs may or may not make you eligible.
This exemption exempts $10,000 from school district taxes (however, homeowners who qualify for both the over-65 exemption and the disabilities exemption may only choose one.). Just as with the over-65 property tax exemption, the school district portion of your tax bill cannot increase; the tax ceiling is the amount you paid in the year you initially qualified for the exemption.
Agricultural Exemption
This exemption does not apply to most homeowners. It is designed to reduce property taxes for property owners who own ten or more acres of land that are primarily devoted to agricultural production. It is also not an exemption in the traditional sense. Instead, it’s an alternate mode of evaluating the property. Rather than considering market value or other standard metrics, it assesses the tax value based on its production value.
Pre-Paying Your Taxes
There are also several different strategies for property tax relief if you are in a position to pay your taxes early. One default strategy many homeowners take advantage of is having an escrow account. This doesn’t reduce your tax bill, but it breaks down the total bill into more digestible pieces throughout the year.
If your lender overestimated your property taxes, you may even receive a refund, a credit, or a jumpstart on next year’s taxes. Other forms of tax relief you can get by pre-paying your taxes are discounts. Your county may have either of these discount programs under Tax Code Section 31.05:
- October-November-December Discount: If your county runs this program, you can get a three percent discount for paying your taxes in October, a two percent discount for paying your taxes in November, and a one percent discount for paying your taxes in December. This option does not take into consideration if the tax bills were sent out before or after September 30.
- 3-2-1 Discount: Alternatively, your county may have a 3-2-1 discount plan that takes into consideration the send date of the property tax bill. In this plan, homeowners can receive a three percent discount for paying taxes during the first month after the tax bills were sent out, a two percent discount for the second month, and a one percent discount for the third month. This is helpful for districts that may send out property tax bills after September 30.
Texas Property Tax Relief for Surviving Spouses of People With Qualifying Circumstances
If your spouse was eligible for over-65 or disabilities exemptions but has passed away, you may be able to retain those exemptions. Reach out to your tax district’s office to learn more about the requirements and supporting documentation needed to ensure these exemptions stay in place without interruption.
Related: Understanding Why Your Property Taxes are Higher Than Your Neighbor’s
Protesting Your Property Taxes to Lower Your Property’s Assessed Value
One of the most popular strategies for getting Texas property tax relief each year is protesting your property tax bill. When you receive your bill, you’ll see a line item for your home’s assessed value as determined by the county appraisal district. If you believe this valuation is too high, you can protest that amount and make a counter-assessment.
For example, several homes in your neighborhood may have sold recently, driving up the apparent value of all the homes in the neighborhood. However, if many of the sold homes had improvements or upgrades, that new amount may not reflect your home’s true value.
You can file a protest form and provide supporting documentation for your argument, such as photographs of repairs that need to be made to your home, comps that detail how your home should and should not be compared to other homes in your neighborhood, and other evidence.
Your tax district will consider this evidence and make a counteroffer, accept your valuation, or schedule a hearing to discuss the matter further. Protesting your property taxes is an excellent strategy because even if it doesn’t lower your property taxes as much as you may want, it’s a risk-free approach and will not increase your property taxes.
Make Protesting Your Property Taxes Simple and Stress-Free
Protesting property taxes can become complicated, especially if your county decides to schedule a hearing instead of accepting your argument. If you don’t have time to go to meetings at your tax district’s office or the process seems overwhelming, Home Tax Shield is here to help. We can determine a fair assessment value for your home and manage the entire process on your behalf. Sign up today for help getting Texas property tax relief.