Texas Property Tax Guide 2026: Rates, Exemptions, and How to Lower Your Bill

Texas has no state income tax, but compensates with some of the highest property taxes in the nation. For Texas homeowners, understanding property tax rates, exemptions, and protest procedures is essential for managing housing costs and building wealth.

This comprehensive 2026 guide covers everything Texas homeowners need to know about property taxes, from county-by-county rates to successful protest strategies that can save thousands annually.

Texas Property Tax Basics

How Texas Property Tax Works

Unlike states with statewide property tax rates, Texas property taxes are entirely local:

Tax formula:

Property Tax = (Assessed Value × Total Tax Rate) - Exemptions

Key components:

• Assessed value: Determined by county appraisal district
• Total tax rate: Combined city, county, school district, and special districts (MUD, hospital, etc.)
• Exemptions: Homestead and other qualifying deductions

No State Property Tax

Texas has:

• ❌ No state-level property tax
• ✅ Local property taxes only (cities, counties, school districts)
• ✅ Decentralized system (254 counties, each with appraisal district)

Average effective rate: 1.60% of home value statewide (2026)

National context: Texas ranks #6 highest property tax burden nationally.

Texas Property Tax Rates by County (2026)

Highest Property Tax Counties

Major City Tax Rates

Austin (Travis County):

• Avg rate: 1.93%
• Median home: $575,000
• Annual tax: $11,098

Dallas (Dallas County):

• Avg rate: 2.04%
• Median home: $385,000
• Annual tax: $7,854

Houston (Harris County):

• Avg rate: 2.09%
• Median home: $285,000
• Annual tax: $5,957

San Antonio (Bexar County):

• Avg rate: 2.11%
• Median home: $285,000
• Annual tax: $6,014

El Paso (El Paso County):

• Avg rate: 2.25%
• Median home: $225,000
• Annual tax: $5,063

Lowest Property Tax Counties

(Rural counties with lower rates but fewer services/amenities)

Texas Homestead Exemption (2026)

Standard Homestead Exemption

School district exemption:

• Amount: $100,000 from assessed value (for school taxes only)
• 2026 update: Increased from $40,000 (recent legislation)
• Savings: ~$1,300/year on average Texas home

Example:

• Home value: $400,000
• School tax rate: 1.30%
• Without exemption: $400,000 × 1.30% = $5,200
• With exemption: $300,000 × 1.30% = $3,900
• Savings: $1,300/year

Optional County/City Exemptions

Many Texas jurisdictions offer additional exemptions:

Common optional homestead exemptions:

• County: Up to 20% of home value (many counties use 20%)
• City: Varies (e.g., Austin offers $75,000)
• Junior college: $3,000-$25,000 typical

Total exemption example (Austin homeowner):

• School district: $100,000
• Travis County: 20% of value ($115,000 on $575K home)
• City of Austin: $75,000
• Austin Community College: $25,000
• Total exemptions: $315,000 off assessed value

Age 65+ Additional Exemptions

School district:

• Additional $10,000 exemption
• School tax ceiling (frozen at age 65 amount)

County/City:

• Additional exemptions (varies by jurisdiction)
• Tax ceiling option (freeze your tax amount)

Tax ceiling:

• Property taxes frozen at age 65 level
• Applies even if home value increases
• Improvements may increase ceiling

Example:

• Homeowner turns 65 in 2026, home worth $400,000, taxes = $8,000
• In 2036, home worth $600,000
• Taxes still capped at $8,000 (unless major improvements made)

Disability Exemptions

Disabled person:

• Same $10,000 school district exemption as age 65+
• Tax ceiling option
• Definitions per Texas Tax Code Section 11.13

100% Disabled Veteran:

• Total exemption from property taxes on primary residence
• Must have VA rating of 100% service-connected disability
• Surviving spouse retains exemption if doesn't remarry

Partial disability ratings:

• 10-29% disabled: $5,000 exemption
• 30-49% disabled: $7,500 exemption
• 50-69% disabled: $10,000 exemption
• 70-100% disabled: $12,000 exemption

How to Apply for Homestead Exemption

Eligibility:

• Must own and occupy property as primary residence on January 1
• Texas driver's license or ID with property address
• Only one homestead exemption per person

Application process:

1. Download form from county appraisal district website
2. Complete application (Form 50-114 for general homestead)
3. Provide proof of ownership (closing documents)
4. Provide proof of residency (driver's license, utility bills)
5. Submit by April 30 (late applications accepted, but deadline ensures timely processing)

One-time application: Homestead exemption carries forward automatically each year.

Major Texas County Appraisal Districts:

• Harris County (Houston)
• Dallas County
• Bexar County (San Antonio)
• Travis County (Austin)
• Tarrant County (Fort Worth)

Understanding Texas Property Assessment

Annual Appraisal Process

Timeline:

• January 1: Assessment date (your property value as of this date)
• April-May: Appraisal notices mailed
• May 15: Deadline to file protest (or 30 days after notice, whichever later)

How Appraisal Districts Determine Value

Methods used:

1. Market comparison: Comparable sales in your area (most common for residential)
2. Cost approach: Replacement cost minus depreciation
3. Income approach: For investment properties (rental income-based)

Texas law: Appraisals must reflect "market value" (price willing buyer/seller would agree to).

Market Value vs. Assessed Value

In Texas:

• Market value = Appraised value (typically)
• Assessed value = Market value minus exemptions
• Taxable value = Assessed value (what you pay taxes on)

10% Assessment Cap (Homestead)

Key protection for homestead properties:

• Assessed value cannot increase more than 10% per year
• Applies only to homestead (primary residence)
• Does NOT apply to investment properties or vacant land

Example:

• 2025 assessed value: $400,000
• 2026 market value: $480,000 (+20%)
• 2026 assessed value (capped): $440,000 (+10% max)
• Saves you from paying taxes on extra $40,000

Catch-up provision: When you sell, no cap for new owner (they pay full market value taxes).

How to Protest Texas Property Taxes

When to Protest

You should protest if:

• Appraisal higher than comparable sales
• Property condition issues appraisal didn't account for
• You have evidence of lower market value
• Appraisal increased more than market trends

Success rate: 30-40% of Texas property tax protests result in reduced value.

Protest Deadline

• May 15 or 30 days after appraisal notice (whichever is later)
• Missing deadline = accepting appraised value
• Mark calendar when notice arrives

How to File Protest

Step 1: Notice of Protest

• File online through county appraisal district website (fastest)
• Mail Form 50-132 (Notice of Protest)
• Email or deliver in person

Step 2: Gather Evidence

Comparable sales:

• 3-5 recent sales (within last 6 months)
• Similar size, age, condition, location
• Lower price per square foot than your appraisal

Find comps:

• Zillow, Realtor.com, HAR.com (Houston)
• County appraisal district website (public records)
• Real estate agent (ask for CMA - Comparative Market Analysis)

Property issues:

• Foundation problems
• Roof damage
• Needed repairs
• Functional obsolescence

Document everything:

• Photos
• Contractor estimates
• Home inspection reports

Step 3: Informal Review (optional)

Many appraisal districts offer:

• Informal meeting with appraiser
• Submit evidence early
• Potential settlement without formal hearing
• Advantage: Faster resolution, no hearing stress

Step 4: Formal ARB Hearing

If informal review doesn't resolve:

• Appraisal Review Board (ARB) hearing scheduled
• Present your case (10-15 minutes typical)
• ARB panel (3 citizens) makes decision

Hearing tips:

• Be respectful and factual
• Stick to evidence (comparable sales strongest argument)
• Bring organized packet: comps, photos, estimates
• Emphasize: "I'm not refusing to pay fair taxes, just want accurate appraisal"

Step 5: Binding Arbitration or Judicial Review

If ARB denies:

• Binding arbitration: $500 deposit (refunded if you win), faster
• Judicial review: District court, more formal/expensive

Most homeowners accept ARB decision or settle.

Protest Services: DIY vs. Hired Help

Property tax protest companies:

• Charge 25-50% of tax savings
• No upfront fee (contingency basis)
• Handle everything for you
• Best for: High-value properties or busy homeowners

Popular Texas protest firms:

• O'Connor & Associates
• Five Stone Tax Advisers
• Property Tax Protest (PropTax.com)

DIY protest:

• Free (just your time)
• Full control over process
• Best for: Homeowners comfortable gathering data, presenting case

Hybrid approach: Hire consultant for $200-$500 flat fee to review and advise (you still present).

Texas Property Tax Payment Options

Payment Deadline

Standard deadline: January 31

• Taxes become delinerate February 1
• Penalty and interest accrue (7% penalty + interest)

Payment Methods

Full payment:

• Pay entire year's taxes by January 31
• Most common approach

Split payment option:

• Some counties allow split payments (ask your tax office)
• Typically: Half by November 30, half by June 30
• No penalty if paid on schedule

Senior citizens (65+) / Disabled:

• Can request tax deferral (pay when property sold or transferred)
• Interest accrues (8% annually in 2026)
• Lien placed on property
• Strategy: Only use if genuine cash flow hardship

Mortgage Escrow

Most homeowners with mortgages:

• Property taxes included in monthly mortgage payment
• Lender pays taxes on your behalf from escrow account
• Review escrow statement annually for accuracy

Paid off mortgage:

• You pay taxes directly to county
• Set up automatic savings ($X/month into dedicated account)
• Avoid January shock

Texas Property Tax Strategies for Homeowners

1. Apply for ALL Applicable Exemptions

Don't leave money on table:

• General homestead ($100K school exemption)
• Age 65+ (additional $10K + freeze)
• Disability (if applicable)
• Veteran (10-100% rating exemptions)
• County and city optional exemptions

Example (65+ veteran with 50% rating in Austin):

• School: $110,000 exemption
• County: 20% of value ($115K on $575K home)
• City: $75,000
• Veteran: $10,000
• Total: $310,000 in exemptions

2. Protest Every Year (Especially in Hot Markets)

Austin homeowner example:

• 2022: Protested, reduced from $575K to $535K, saved $772/year
• 2023: Protested, reduced from $590K to $560K, saved $579/year
• 2024: Protested, reduced from $650K to $610K, saved $772/year
• 2025: Protested, reduced from $695K to $655K, saved $772/year
• 2026: Protested, reduced from $740K to $700K, saved $772/year

5-year savings: $3,667 (plus compounding future savings)

Set annual calendar reminder: Protest notice typically arrives April-May.

3. Understand the 10% Cap

If your home's market value exceeds capped increase:

• Your taxes still rise 10% (cap limits increase)
• But you avoid paying on full market value appreciation
• When you sell, next owner pays full market value (their taxes higher)

Selling consideration: Buyer may face higher taxes than you're paying (disclose in competitive markets).

4. Time Major Renovations Strategically

January 1 assessment date critical:

Bad timing:

• Complete $100K renovation in December 2025
• January 1, 2026 assessment includes new value
• Taxes increase in 2026

Better timing:

• Complete renovation in February 2026
• January 1, 2026 assessment = old value
• Taxes don't increase until 2027

One year tax deferral on improvement value.

5. Consider Property Portability (Over-65)

Texas Tax Code Section 11.13(j):

If you're 65+ and sell home to buy another:

• You can transfer (port) your frozen tax ceiling to new home
• Conditions:
• New home must be more expensive than old home's frozen value
• Purchase within 2 years of selling old home
• Apply for portability within first year

Example:

• Age 68, current home tax ceiling: $6,000/year
• Sell current home, buy new home that would have $10,000 taxes
• Port ceiling: Pay only $6,000 on new home (saves $4,000/year)

Huge benefit for Texas retirees who downsize geographically but not in home value.

6. Monitor Your Property Card

County appraisal districts maintain "property cards":

• Square footage
• Number of bedrooms/bathrooms
• Year built
• Lot size
• Improvements

Check for errors:

• Incorrect square footage (common in older homes)
• Pool or garage listed that doesn't exist
• Finished areas counted twice

Request correction immediately if errors found (can significantly reduce appraisal).

Texas Property Tax Impact on Home Affordability

DTI Calculations

Mortgage lenders include property taxes in debt-to-income ratio:

Example (Dallas home):

• Purchase price: $400,000
• Down payment: 20% ($80,000)
• Loan amount: $320,000
• Mortgage (7%, 30-year): $2,129/month
• Property tax: $650/month ($7,800/year)
• Homeowners insurance: $200/month
• Total PITI: $2,979/month

Qualification impact: High Texas property taxes reduce how much home you qualify for compared to low-tax states.

HELOC/Cash-Out Refinance Considerations

When tapping home equity:

• Lenders escrow property taxes (if new first lien)
• Higher tax bill reduces HELOC approval amount
• Reason: Higher PITIA = higher DTI = less borrowing capacity

Strategy: Protest taxes before applying for HELOC to maximize approval amount.

See: Texas HELOC Guide

Investment Property Tax Impact

No 10% cap on investment properties:

• Full market value taxed every year
• Can significantly impact cash flow
• Must factor into investment analysis

Example (Austin rental):

• 2023 assessed: $450,000, taxes: $8,685
• 2024 assessed: $525,000, taxes: $10,133 (+$1,448)
• 2025 assessed: $600,000, taxes: $11,580 (+$1,447)

Rental income must keep pace with tax increases or returns suffer.

DSCR loan strategy: Factor in 3-5% annual property tax increases when calculating debt service coverage ratio.

Learn more: DSCR Loans Texas

Texas Property Tax Deduction (Federal)

SALT Deduction Cap

Federal tax law (2026):

• SALT deduction cap: $10,000 ($5,000 if married filing separately)
• Includes state income + property taxes OR state sales + property taxes
• Texas has no income tax, so full $10,000 can go to property tax

Benefit for Texas homeowners: Since no state income tax, Texas homeowners can deduct full $10,000 property tax (if they itemize).

Many Texas homeowners hit cap:

• $10,000 tax = $625K home at 1.60% rate
• Above this: No additional federal deduction
• High property taxes partially offset by no state income tax

Itemize vs. Standard Deduction

2026 standard deduction:

• Single: $15,000
• Married filing jointly: $30,000

Texas homeowner considerations:

• Mortgage interest + property taxes + charitable giving must exceed standard deduction to itemize
• Many newer mortgages (lower interest) + SALT cap = standard deduction better

Strategy: Run the numbers with CPA to optimize.

Related Articles

• Texas HELOC Guide
• HELOC Rates Texas 2026
• DSCR Loans Texas
• Property Tax by State
• Homestead Exemption Guide
• Challenging Property Assessment

Conclusion

Texas property taxes are a significant expense for homeowners, but understanding the system—exemptions, caps, protest procedures—can save thousands annually. The combination of homestead exemptions, the 10% cap, and successful protests provides powerful tools to manage your tax burden.

For 2026, Texas homeowners should:

1. Ensure all exemptions applied (especially $100K school exemption)
2. Protest appraisals if market value questionable
3. Leverage age 65+ benefits (freeze and portability)
4. Time renovations to minimize immediate tax impact
5. Monitor property card for errors

While Texas property taxes are high, they fund excellent local services and infrastructure. The key is ensuring you're paying a fair amount based on accurate appraisals and maximum exemptions.

HonestCasa helps Texas homeowners understand how property taxes impact home equity borrowing and investment property financing. Connect with us to explore HELOC and DSCR loan options tailored to Texas real estate investors.