Understanding the High Property Taxes in Texas and How to Manage Them
Property taxes in Texas have long been a topic of discussion among homeowners, often leaving residents wondering why their tax bills seem so steep compared to other states. Known for its lack of state income tax and booming population, Texas relies heavily on property taxes to fund essential services, resulting in high property tax rates that create a unique financial landscape for its residents.
While these taxes have always been relatively high, recent years have seen them climb even further, driven by a combination of historical factors and modern market dynamics. In this article, we’ll explore the question, “why are property taxes in Texas so high?” look at what’s been pushing them higher lately, and discuss some practical steps you can take to ensure you’re not overpaying.
Why Are Property Taxes in Texas So High? The Big Picture
To understand the current state of property taxes in Texas, it’s helpful to look at the broader context that has shaped the state’s tax system over time. Understanding why property taxes in Texas are so high requires examining three core reasons why Texas consistently ranks among the states with the highest property tax rates.
1. No State Income Tax
Texas is one of only nine states without a state income tax. This absence provides significant savings for residents and simplifies tax season, but it also means the state government has less revenue to fund public services like education, infrastructure, and healthcare.
Instead, these responsibilities are largely shifted to local governments—cities, counties, and school districts—which rely heavily on property taxes to fill the gap. Local appraisal districts set tax rates to support everything from schools to road maintenance, placing a larger burden on property owners and resulting in higher property tax rates.
This system has been in place for decades, reflecting a long-standing preference among Texans to avoid income-based taxation in favor of property-based funding. However, this reliance can lead to disparities, as wealthier areas with higher property values generate more revenue, while less affluent regions struggle to fund the same level of services, often prompting higher tax rates to compensate.
2. Growing Cities and Expanding Infrastructure
Texas is a state on the move. As the second most populous state in the U.S., its cities like Dallas, Houston, and Austin are constantly expanding to accommodate both new residents and economic growth. This expansion requires significant investment in roads, utilities, schools, and other public amenities.
Local governments often use property tax revenue to fund these projects, especially as they aim to attract businesses and residents with appealing infrastructure. For example, fast-growing suburbs like Frisco and McKinney have become economic hotspots, necessitating continuous investment that keeps property taxes elevated due to rising property values.
This growth isn’t just about keeping up with demand—it’s also about staying competitive. Texas cities often vie for corporate relocations, offering tax incentives that must be offset elsewhere, typically through property taxes. The result is a cycle of investment and taxation that supports the state’s reputation as a business-friendly environment but adds pressure on homeowners.
3. Persistent Housing Demand
The Texas housing market is fueled by steady demand from a variety of sources: young adults moving out on their own, newcomers relocating from other states, and households splitting due to life changes. This demand remains strong regardless of economic ups and downs, creating a competitive market.
When housing inventory can’t keep up, home prices rise, which in turn increases property valuations and the annual property tax bill. This dynamic has been a constant in Texas, making it a key driver of high property taxes. Beyond these everyday factors, Texas has also become a magnet for climate migrants and retirees seeking milder winters and lower overall costs of living compared to states like California or New York. This influx further strains housing supply, pushing prices—and thus tax assessments—higher as appraisal districts adjust to reflect market trends.
Market Appraisals vs. Tax Appraisals: Clearing Up the Confusion
Since property taxes are tied to home values, it’s worth distinguishing between two types of appraisals—this difference is key to understanding why property taxes in Texas are so high**.** A market appraisal happens when you’re buying or selling a home, determining its value for the sale or loan process—homeowners typically want this number to be high.
On the other hand, a tax appraisal is conducted by your local appraisal district to set the taxable value of your property, and owners usually hope for a lower figure to keep taxes manageable. While these two appraisals can influence each other, they serve different purposes and don’t directly dictate one another, making it crucial for every property owner to understand the distinction.
It’s also worth noting that tax appraisals often lag behind market trends, meaning a sudden spike in home sales prices might not immediately hit your tax bill—but when it does, the impact can be significant. Conversely, if the market cools, tax values might not drop as quickly, leaving homeowners feeling stuck with inflated assessments.
What’s Been Driving Taxes Higher Recently?
While the factors above have long contributed to high property taxes, recent years have intensified the situation. This helps explain why property taxes in Texas are so high in 2025, specifically. The period following 2020 saw a surge in migration to Texas, fueled by remote work trends and a desire to leave dense urban centers like Los Angeles and New York, overwhelming the housing market and driving significant home price growth in major metro areas as demand outpaced supply.
According to the Texas Real Estate Research Center, that growth has been notable in the past, though by October 2024, median home prices in these areas—like Dallas, Houston, Austin, and San Antonio—showed stability, with the statewide median holding steady at $335,000 despite ongoing market fluctuations. These ups and downs continue to influence property valuations, keeping tax appraisals a moving target for homeowners.
At the same time, construction costs have soared due to supply chain issues and labor shortages, slowing the pace of new home building. Many existing homeowners also hesitated to sell, uncertain about finding a new place in a tight market.
As a result, homes sold at premium prices, and these higher values quickly translated into increased tax appraisals. Even if the tax rate stayed the same, the jump in assessed property values meant bigger tax bills for homeowners.
This trend has continued into 2025, with lingering effects from the pandemic-era boom still rippling through the state. Inflation has kept construction costs elevated, and while some areas have seen a slight increase in housing inventory, the pace of new builds hasn’t fully caught up to demand. Additionally, rising interest rates have made borrowing more expensive, deterring some builders and buyers alike, which keeps the market tight and property values—and taxes—high.
Keeping Property Taxes in Check in 2025
While you can’t single-handedly change Texas’ tax structure or market trends, there are tools and protections available to help Texas property owners manage their property tax burden. Here are three key ways to keep your taxes reasonable this year:
1. Limits on Budget Increases
In 2019, Texas voters approved a law that prevents cities and counties from raising property tax revenue by more than 3.5% annually without voter approval. This cap ensures that tax rates don’t spiral out of control, balancing the need for growth with affordability for residents. It’s a safeguard that keeps local governments accountable while allowing necessary budget adjustments.
This measure has been a lifeline for homeowners in fast-growing areas, where local governments might otherwise hike taxes to fund ambitious projects. However, it’s not foolproof—smaller jurisdictions sometimes find workarounds, like issuing bonds, which can indirectly affect tax bills over time.
2. Homestead Exemptions
Homeowners can take advantage of exemptions to reduce their taxable property value. The general homestead exemption, for instance, now deducts $100,000 from your home’s value when calculating school district taxes—a savings of about $1,000 annually in many areas, given typical school tax rates around 1%.
Additional exemptions, like $10,000 for seniors over 65 or those with disabilities, can further lower your bill. Disabled veterans with a 100% VA disability rating may even qualify for a full exemption.
These exemptions are especially valuable in 2025, as property values remain high. For new homeowners, applying early can lock in savings before the tax bill arrives, while long-term residents can benefit from options like the homestead cap, which limits annual increases in assessed value to 10% for qualifying properties.
3. The Right to Protest
Every Texas homeowner can challenge their property’s appraised value to ensure it’s accurate and fair. Each spring, your appraisal district will send a Notice of Appraised Value if your property’s value has changed. Even if you don’t get a notice, you can (and should) still check your valuation and protest it.
To initiate a protest, file a Notice of Protest by May 15 or within 30 days of receiving your notice, whichever is later. This starts a review process that could lower your tax appraised value. First, the appraisal district reviews your case. Then, you might meet with an appraiser in an attempt to settle informally, or you’ll go to a formal hearing with an impartial panel to decide your value.
Protesting is more common now because home values have risen sharply. Many residents succeed by showing evidence like recent sales of similar homes or estimates of property issues. In 2025, with market conditions still volatile, a well-prepared protest could save hundreds—or even thousands—on your tax bill.
How Local School Funding Ties Into High Property Taxes
A significant chunk of your property tax bill goes toward funding Texas’ public schools, which adds another layer to the state’s high property taxation story. This education funding model is a critical factor in why property taxes in Texas are so high compared to other states. Unlike states with income taxes that funnel revenue directly to education, Texas leans on local property taxes to support its school districts.
This system, rooted in the state’s history, aims to give communities control over their schools but often results in higher tax rates, especially in areas with growing student populations or aging facilities needing upgrades. School districts can account for the largest share of property tax revenue statewide, amounting to about half of the total bill in many counties.
This reliance on property taxes for education can create inequities. Wealthier districts with high-value homes generate more funding per student, while poorer areas may struggle to keep up, even with higher tax rates. State programs like the Foundation School Program aim to balance this by redistributing some funds, but local taxes remain the backbone.
For homeowners, this means your tax bill isn’t just about your house—it’s about supporting a sprawling education system that’s constantly adapting to Texas’ growth. Understanding this connection can help you see why rates feel so steep and why exemptions or protests are critical tools for managing costs.
What Can You Do About High Property Taxes?
High property taxes in Texas are a reality shaped by decades of growth, no state income tax, and a reliance on local funding for schools and services. The answer to “why are property taxes in Texas so high?” involves this complex interplay of factors within the Texas property tax system that won’t change overnight. Recent years have added fuel to the fire, with past home price surges and lingering market pressures—like high mortgage rates and tight supply in many areas—keeping valuations and tax bills elevated into 2025.
Thankfully, homeowners have options to fight back. From homestead exemptions that cut your taxable value to caps on budget increases and the right to protest unfair appraisals, you can take steps to ease the burden. These tools offer a way to balance the state’s unique tax system with your financial well-being.
A successful protest can significantly lower your tax bill, especially in a volatile market where overassessments are common. Home Tax Shield assesses your property’s value, guides you through the protest process—from filing to hearings—and fights to ensure you pay only what’s fair. We do all the work, and you ensure your value is accurate and fair—year after year. Sign up with Home Tax Shield today to see how we can simplify the process, save you time, and keep more money in your pocket this year.