Even If the Real Estate Market Is Cooling, Your Tax Bills Might Still Go Up—Here’s What to Do About It
The median property tax bill in Texas continues to be among the highest in the nation, with some popular counties seeing average bills over $3800 annually. Property tax bills have been on a strong upward trajectory for years.
While recent policy changes like increased homestead exemptions have aimed to provide relief, even these changes have left homeowners across the state uncertain about whether strong market forces will continue to ratchet up their tax bills.
Despite that uncertainty, there are steps every homeowner can take to better understand what tax bills will look like over the next few years and what to do to reduce property taxes as much as possible. One of the most important strategies—protesting your property taxes every year—is vital whether the real estate market goes up or down.
Factors That Affect Your Property Tax Bill
Navigating your Texas property tax bill can feel like solving a complex puzzle, but understanding the key factors that influence your annual assessment is essential for every homeowner. While the final bill that arrives in your mailbox each October might seem like a fixed number, it’s actually the result of several interconnected elements working together.
Whether you’re a new homeowner or have been paying property taxes for years, knowing these critical factors can help you take control of your tax burden and potentially save thousands of dollars each year. Let’s break down the main components that determine how much you’ll owe:
- Your county and city tax rates: Texas property taxes are a local tax, not a state tax, so the municipal activity in your area has a direct effect on your property tax bills. However, there are several checks in place to make sure local governments can’t increase their budget too steeply in any given year.
- Tax relief you’re entitled to receive: Qualifying homeowners can get exemptions on their property that reduce their home’s taxable value for different levies. For example, the homestead exemption, one of the most commonly held exemptions, removes $100,000 of a home’s value from school district tax calculations. It also caps any potential increases in the home’s taxable value to a maximum of 10% each year.
- Your property’s tax appraised value: This is the most dynamic piece of the puzzle, and it’s based on market value. County appraisers evaluate the value of your home, taking into consideration the land and structure based on the values of surrounding homes.
- Whether or not you protested your home’s appraisal value: Long before you receive your final property tax, your county will establish the new tax appraised value of your home. If your home’s value goes up, they must send you a notice of appraised value in the spring. You have a small window of opportunity to protest the tax appraised valuation if you believe it’s inaccurate.
When you successfully protest your home’s appraisal value, this lowers the number that county tax officials work with when they’re calculating your home’s taxable value and total property tax bill. If you miss this opportunity, your taxes will be determined by whatever value the county appraisers decide without your input.