FAQ # 3 - Why Are Property Taxes So High in Texas?
That's a question that I have been asked quite often from many out of state residents, who have decided to relocate, and purchase a home in Texas. Many non-Texas residents are just not used to seeing “High Property Taxes”. But there is a reason why Texas has “High Property Taxes”. First, Texas has NO State Income Tax. Second, Texas needs a way to fund our public school education system. Third, Property Taxes are another source of income for the state to support many public projects throughout the state.
If you take a closer look at Texas property taxes you will notice that the largest amount is always allocated to support the public school system. I don’t claim to have all the answers, but I know many were under the impression that when Texas started that State Lottery, that the majority of the public schools expenses would be funded by the State Lottery. However, the State Lottery has not relieved property owners the burden of paying “Higher Property Taxes”.
Property taxes are a significant part of the overall cost of owning a home in Texas. The state has no income tax, so property taxes carry a heavy load when it comes to funding public-school, city, and county budgets.
How is the tax determined?
There are two components that go into figuring how much property tax you owe: the value of your home and the tax rate.
Your county appraisal district has the responsibility of appraising your home. The appraisal district bases that value on the location, size, and features of your home, as well as recent sales prices of similar properties in your neighborhood.
Taxing entities, like school districts, cities, counties, municipal utility districts, community colleges, hospital districts, and others, independently set their tax rates. These rates are expressed as an amount per $100 of property value. So a tax rate of 23 cents on a $150,000 property would equal $345 in taxes (150,000/100 x .23).
Exemptions are another way to lower your property tax liability, but that will be a topic for another blog post. Just know that Texas has the Homestead Exemption, Military Disability Exemption, and Over 65 Exemptions that will all lower your home’s property taxes.