Texas property tax law changes every few years. See the latest posts for the most up-to-date information.
Your local government sends you a property tax bill every October. While your eyes might first be drawn to the highlighted number at the bottom that displays your total property tax obligation, it’s also essential to look at the line item breakdown of how your county or city government arrived at that final bill amount. By reviewing your property tax document, you can learn more about services and developments in your area, what your property taxes are paying for, and how the county assessor arrived at that number for your property.
Armed with these details, you can either protest your property taxes more effectively or better understand your stake in local votes and budget discussions at the city or county level. This guide to the differences between property tax rates vs. property tax values will break down the moving parts of your tax bill. By the end of it, you’ll know:
- What property tax rates are
- What property tax values are (and how they’re calculated)
- What you can do if you disagree with your property tax value
What’s the Difference Between Property Tax Rates vs. Property Tax Values?
City and county governments assess property taxes on many properties within their jurisdiction, with different processes for calculating the taxes on everything from industrial buildings to raw land to single-family residences. Your home’s property tax bill comes from one basic calculation:
- [Property Tax Bill] = [Assessed Property Value] * [Texas’s Property Tax Rate]
For example, suppose you have a $200,000 single-family home taxed at a standard effective property tax rate in Texas — 1.8%. In this case, your property tax bill will be $200,000 * 0.018, or $3,600. If you’re solely interested in making sure the calculations make sense, then all you need are those three numbers: the tax rate, your property’s assessed value, and the final amount due. If the math checks out, you might be satisfied. But let’s take a closer look at those numbers.
A Deeper Look at Calculating a Property Tax Bill
When you scan the middle of your tax bill or look up your home’s assessed value on your County Appraisal District website, you’ll notice that the tax rate and assessed value are broken down more thoroughly. Not only will your assessed property value change year after year, but the tax rates themselves will vary based on the changing revenue needs of your community.
Your assessed property value is made up of two different sums: the value of the land and the value of the homesite or the structure(s) on the property. The total sum, less any agricultural use and homestead cap loss, is the total assessed value.
The tax rate is composed of multiple different levies from different entities. For example, your city may charge you a 0.47% rate, while the school district will separately levy a tax of 1.33%. Other entities, like the county and local public colleges, will also have additional taxes. These rates are combined into a total effective tax rate. By breaking down the numbers, you can determine how much of your annual property taxes are going to different entities and projects.
What Your Property Taxes Pay For
In Texas, property taxes pay for local resources and services. Property tax funds collected by your local tax assessor are the primary source of funding for public resources like:
- Public school systems
- City and county road maintenance and construction
- Emergency services, including police, emergency medical services, and fire protection
- Libraries
- Playgrounds and parks
The amount of funding required can vary each year depending on the approved budget for your city or county. Under Texas law (Senate Bill 2), most local governments must get voter approval before raising total property tax revenue collected by 3.5% or more. While this can cap total property taxes collected by a local government, there are other steps you must take to limit your tax bills, including:
- Filing a residential homestead exemption
- Filing an exemption as a senior, as a disabled homeowner, or as a disabled veteran
Related: Do You Know Your Rights Related to Property Taxes in Texas?
What Are Property Tax Rates?
A property tax rate is the tax a city or county government levies against all eligible properties in their jurisdiction. There is no state income tax in Texas, so the property tax rate is higher than the national average to cover the local funding needs a state income tax would otherwise provide.
Who Decides the Rates?
Because the local government assesses and manages the entire process, different counties will have different tax rates based on their individual spending needs. To determine the tax rate, your local government will first evaluate the collective property values in the county and the total revenue the city or county needs to cover anticipated spending or debts. Based on these two numbers, the government will calculate the introductory tax rate most properties will be taxed at to collect enough revenue.
What Numbers Should You Expect?
Texas has the seventh-highest property tax at 1.69%, compared to the national average of 1.07%. However, that doesn’t mean you should calculate your bill using that average rate. Instead, consider your county’s growth and typical spending, or look up past property tax rates for your county. The property tax rate in El Paso County is 2.24%, whereas Ward County’s rate is 0.51%.
The tax rate can even shift depending on your city within the county. Both counties and city-based school districts can levy different tax percentages. As such, a resident of Frisco and a resident of Plano may face different property tax rates, even though they are both residents of Collin County and the same county officers are managing their tax obligations.
Can You Protest or Change the Property Tax Rates That Affect Your Property Tax Bill?
Unlike your assessed property value (which we’ll discuss in the next section), homeowners have little direct say in the property tax rates their property is subject to. Homeowners are responsible for paying taxes to all of the entities listed on their property tax bill — even if, for example, you don’t have children attending a school or they’re attending a private school. However, you can reach out to your county office if there is an error on your tax bills, such as being taxed for the wrong school district or city.
Homeowners can also reduce the impact of individual tax levies on their total bills. For example, if you file a homestead exemption, the first $40,000 of your home’s value is exempt from the local school’s tax levy. Suppose you have a home valued at $200,000, and your county’s effective tax rate is 2% (0.25% for county fees, 0.50% for city fees, and 1.25% for the school district). Without a homestead exemption, your property tax bill would look like this:
- County: (200,000*0.25%) = $500
- City: (200,000*0.50%) = $1,000
- School: (200,000*1.25%) = $2,500
- Total: $4,000
But with your homestead exemption, your taxes are reduced:
- County: (200,000*0.25%) = $500
- City: (200,000*0.50%) = $1,000
- School: ((200,000-40,000)*1.25%) = $2,000
- Total: $3,500
If you feel like your property tax bill is incorrect, but you aren’t sure what steps to take or how to verify the total bill, a professional property tax service can help.
What Are Property Tax Values?
The main avenue by which homeowners can fight their property tax bill is by contesting the assessed property value of their home. This is the county’s assessment of your property’s value (both the land and the structures) based on historical and current property values, improvements made to the property, and other factors.
Different counties and assessors may use other techniques for assessing your property, such as:
- Sales evaluation method – how much your home might be worth on the market
- Cost method – how much it would cost to rebuild or replace your home
- Income method – a calculation based on how much revenue you could receive by renting the property
The county must reassess your property at least once per three-year period; during the other years, your property’s assessed value may be revised based on general trends in the county.
Can You Protest or Change the Property Tax Value That Affects Your Property Tax Bill?
If you believe your property’s assessed value is incorrect, you can officially protest it with your county by filling out a form and providing a counter-assessment. Some of the reasons you might believe your property value should be lower include:
- The comparables the county may have used to assess your home are not an accurate match
- Your home has outdated features or fixtures
- Unique factors that should weigh in the calculations (proximity to powerlines or an interstate, burdensome easements, or other factors that reduce the potential sales value of your home)
Related: Should You Protest Your Property Taxes Yourself or Hire a Pro?
Home Tax Shield Is Here to Help
Knowing more about how your property taxes are calculated and what you can do if those calculations seem wrong is an essential first step. But if the protesting process is too inconvenient or challenging, the professionals at Home Tax Shield are here to help.
We can examine your tax bill, determine your property taxes, and help protest your property taxes. Our team can advise you on the next steps or manage the entire process on your behalf. Contact us today to learn more about how to reduce your property tax bill by filing exemptions, protesting your property taxes, and more.