Home prices in Texas are on the rise, and homeowners are feeling the heat. You probably bought your home expecting a certain level of property taxes. But as your property value increases, so does your tax bill. And that can hit your wallet harder than expected. The big question is: How Rising Home Values Impact Texas Property Taxes? And what should homeowners be bracing for? Let’s break it all down.
Why Are Home Prices in Texas Climbing?
Before we get into the tax side of things, it’s important to understand why home prices are going up.
- Population Growth: Texas continues to attract new residents from other states, especially from California and New York.
- Strong Job Market: Major cities like Austin, Dallas, and Houston are booming with tech and business opportunities.
- Low Inventory: High demand and limited housing supply are driving up prices.
- Inflation: Construction materials and labor costs are more expensive, pushing home prices higher.
When you mix all that together, you get a housing market where prices just keep climbing.
How Texas Property Taxes Work (It’s Not Like Other States)
Texas property taxes fund local services like schools, roads, and fire departments. But here’s the kicker: we don’t have a state income tax. That means cities and counties rely heavily on property taxes. Two things decide your bill:
- Your home’s appraised value (what the county thinks it’s worth).
- Local tax rates (set by cities, counties, and school districts).
When home prices rise, appraised values jump. Even if tax rates stay the same, your bill climbs. And in hot markets like Austin or Dallas? Values are soaring.
Rising Home Prices = Higher Texas Property Taxes. Here’s How It Hits You
Let’s say you bought a home in Houston for 300kin2020. Today, it’sworth300kin2020. Today, it’sworth450k. The county taxes you on that $450k value. Even if your tax rate dropped slightly, you’re still paying more.
Real Example:
- 2020 Home Value: 300,000∣∗∗TaxRate:∗∗2.5300,000∣∗∗TaxRate:∗∗2.57,500
- 2024 Home Value: 450,000∣∗∗TaxRate:∗∗2.3450,000∣∗∗TaxRate:∗∗2.310,350
You saved 0.2% on the rate… but paid $2,850 more.
Why This Hurts:
- Fixed-income retirees get priced out.
- Families face tough budget choices.
- New buyers get “sticker shock” after purchasing.
How Increasing Home Values Affect Texas Property Taxes
In Texas, property taxes are based on the appraised value of your home. When home prices rise, appraisal values go up. And when appraisal values go up, so do your property taxes.
The math is simple but brutal. If your property value jumps from $300,000 to $400,000 and your tax rate is 2.5%, your tax bill just went from $7,500 to $10,000 per year. That’s a $2,500 hike—ouch. But it’s not just about market value. Appraisal districts do their own assessments, and those values can sometimes be even higher than what you expect.
Can Homeowners Fight Rising Property Taxes?
Yes, and you should if your appraisal feels too high.
Here’s how:
1. Protest Your Appraisal (Yes, You Can Win)
Gather evidence: recent sales of similar homes in your area (aka “comps”), photos of needed repairs, or errors in your home’s details. 35-40% of protests succeed. So many clients slash $50k off their appraised value in minutes.
2. Claim Every Exemption You Qualify For
- Homestead Exemption: Lowers your taxable value if it’s your primary home.
- Over-65 or Disability Exemptions: Freeze school taxes or reduce rates.
- Veteran Exemptions: Up to 100% tax relief for disabled vets.
Budget for the Increase
If your home’s value jumps, set aside extra cash monthly. A 200/month increase feels better than a 400-surprise bill.
What Homeowners Can Expect Moving Forward
As long as home prices keep climbing, property taxes will keep climbing with them. But it’s not just about bracing for higher bills. You need to take action.
- Stay on Top of Your Property’s Appraised Value: Review your appraisal notice every year.
- Apply for Exemptions: Make sure you’re getting every exemption you qualify for.
- Consider Protesting: Don’t just accept the appraisal district’s assessment as gospel.
- Plan for the Future: Budget for potentially higher taxes in the years to come.
FAQs
-
How often are property taxes assessed in Texas?
They’re assessed annually. Homeowners receive appraisal notices each year, usually around April. -
Can my property taxes go down if the housing market cools?
Yes, but it’s not automatic. You would need to file a protest or request a reappraisal if your home’s value decreases significantly. -
How much can my property taxes increase each year?
For homestead properties, increases are capped at 10% per year. But if it’s not your primary residence, there’s no cap. -
What’s the best way to lower my property tax bill?
Applying for exemptions and protesting inflated appraisal values are your best options. -
Why does Texas rely so heavily on property taxes?
Because the state doesn’t have a state income tax, so property taxes are a key revenue source for local governments.