Texas homeowners are paying high property taxes. While they aren’t quite at the peak price they experienced during the latter half of the pandemic, elevated property values and high city budgets that are trying to keep up with the pace of growth and services demands led to unpleasant surprises in 2022—and are just as likely to do the same when property tax bills come out the fall.
But before those bills go out and the appraisal district roll gets set in stone this summer, homeowners should do everything they can to ensure they’re paying the lowest possible property tax amount. Homeowners can take two key avenues: filing for any property tax exemptions in Texas they may qualify for and protesting their property assessment.
In this quick guide, learn more about the top property tax exemptions that can significantly impact your tax obligations and save you a lot of money (both in this upcoming year and years to come). After reading this article, you’ll be able to:
- Check what property tax exemptions are in effect for your property profile
- Know the key benefits of the most common property tax exemptions in Texas
- Take action on the filing process
- Start pursuing the other avenue for property tax relief: filing a protest
Where Property Tax Exemptions in Texas Come Into Focus
For many homeowners, the property taxation process is fairly automated. Your local appraisal district will assess your home’s market and appraisal value and may even send you a notice if your home’s value is increased. Then, in the fall, you’ll receive another notice about your property tax bill total, which is officially due in January.
However, for most homeowners with a mortgage, your mortgage services provider has quietly accrued the estimated total of your property taxes from a portion of your monthly mortgage. They will handle the actual transfer of funds. If you don’t take action, these steps will continue without intervention, and you’ll pay the property taxes based on the unadjusted assessed value of your home.
Related: What Taxes Do Homeowners Pay in Texas?
That said, you can intervene by filing for a property tax exemption. Qualifying homesteads, homeowners with qualifying factors, and those with qualifying agricultural land can file for property tax exemptions to shelter part of their property’s value from tax calculations.
But you won’t always receive these exemptions automatically. As a property owner, you must first file for the exemptions, provide documentation, verify that the right exemptions stay in place year after year, and protest inaccuracies in your property records as necessary.
Why You Need to Know About Property Tax Exemptions in Texas
Before starting the process, knowing how property tax exemptions work is important. Property taxes are split into distinct tax levies for school district taxes, city or county taxes, etc. Many exemptions protect a portion of your assessed value for one of the primary tax levies—school district taxes—and smaller tax line items that not all counties have.
If you qualify for an exemption, you must fill out the appropriate form and provide documentation supporting your claim. You also must use the property as your primary residence in Texas and cannot be using the exemptions across multiple different properties simultaneously.
For more details about the process in your county or tax jurisdiction, contact your local Central Appraisal District or visit the Texas Comptroller’s Office website. They can direct you to the appropriate forms and the right mailing address for any forms or documentation that cannot be handled online.
Generally, property tax exemptions must be filed by May 1st to apply to a given tax year. But even if it’s past the deadline, filing them as soon as possible can ensure they’re in place for subsequent years.
Top 5 Property Tax Exemptions in Texas
Property tax exemptions are among the strongest—and simplest—ways to lower your property tax obligations. You can reduce the amount due for specific levies within your area and lower your effective property tax rate. While homeowners cannot use the exemptions across multiple properties (e.g., you cannot file two separate single-family residences as your primary residence and receive exemptions), qualifying property owners may be able to put multiple exemptions on a single property (e.g., if you’re a 70-year-old homeowner with a Texas property as your primary residence).
There are five popular exemptions:
1. General Residence Homestead Exemption
Also called simply a ‘homestead exemption,’ this provision will protect $40,000 of qualifying homeowners’ assessed property value from school district taxes. Your county may also have a local option exemption of at least $5,000 and no more than 20% of your home’s value (though this varies from county to county). You might also receive a $3,000 exemption if your county collects tax revenue for flood control or farm-to-market roads.
Since school district taxes often make up at least half of your property tax bill, this can result in substantial savings. For example, suppose you have a $300,000 home in a city with a 1.2% school district tax. In that case, a general residence homestead exemption will save you $480 and may save you an additional $720 at Texas’s average 1.8% property tax rate.
To qualify for this option, you must establish that:
- You own (or have an ownership interest in) the property
- The property at hand is your primary residence
- You aren’t claiming a homestead exemption for any other property, whether it’s in Texas or not
One More Long-Term Advantage of Homestead Exemptions: Property Value Increase Cap
Year over year, the appraised value of your property may increase. Low inventory on the housing market, demand for housing in your area, and increasing sales prices in your neighborhood can all play a role in this increase, even if your home isn’t updated or sold. Properties may see a yearly 10%, 15%, or even 20% increase.
If you have a homestead exemption, your tax appraisal district can’t raise your appraised value by more than 10% (aside from any increases due to improvements you may have made to the property). Over the years, the compounded effect of this cap can result in hundreds or even thousands of dollars in savings.
2. Over-65 Exemption
This exemption supplements the general homestead exemption. If you are 65 or older, you can file for an additional $10,000 exemption for school district taxes. You also qualify for a tax ceiling—that is, your school district taxes will not exceed the amount you pay in the year you qualify for the exemption as long as you own the home and use it as your primary residence (though some exceptions do apply).
3. Exemption for Homeowners With Disabilities
This exemption operates very similarly to the over-65 exemption; it supplements the general provision by removing another $10,000 of your home’s value from school district tax calculations.
However, if you are both over 65 years old and have a qualifying disability, each taxing unit can only apply one of the two provisions, not both simultaneously.
4. Disabled Veterans Exemption
Disabled veterans and their surviving spouses are eligible for a disabled veterans exemption, which operates separately from the standard exemption for homeowners with disabilities. This exemption can be used for any one property a qualifying veteran owns, even if it isn’t their primary residence.
Related: The Best Ways to Get Texas Property Tax Relief
The exemption amount varies based on the disability rating determined by the VA or specific military brand; exemptions can range from $5,000 of the property’s value to $12,000—or even the property’s entire value in specific circumstances.
5. Agricultural Land “Exemption”
The fifth popular exemption isn’t an exemption at all. Instead, it’s an alternative means of calculating the property owner’s tax obligation. This approach determines the property’s value based on the “productive agricultural value,” which is generally significantly lower than the standard market assessment.
Accessing this form of tax relief requires documentation establishing that the land has been used for qualifying agricultural purposes for at least five of the last five or seven years (based on location).
You Know About the Property Tax Exemptions in Texas — Now What?
If you think any of the above property tax exemptions should apply to you or your property, now is the time to file the paperwork and get those designations. But if you think you may have already filed for the exemptions in the past, you can verify with your Central Appraisal District office.
Every appraisal district has its own processes; some may provide that information online, while others will require you to call or request by mail. Also, if you know an exemption should be in place but don’t see it on your Notice of Appraised Value, file a protest with the appraisal district to ensure the omission is corrected before the appraisal district roll becomes certified and finalized.
Turn to Home Tax Shield for Support During the Property Tax Protest Season
Proactively managing your exemptions and filing to correct any perceived mistakes in your property tax records is important but can also be overwhelming. If you don’t have the time to file protest notices regarding missing exemptions or any inaccuracies in your property’s appraised value, the team at Home Tax Shield is here to help. Sign up today to ensure you’re paying a fair property tax bill.