If you’re a homeowner in Texas, you’ve probably received a property tax bill at some point. Property taxes are an important source of revenue for local governments, and they help pay for schools, roads, public safety, and other services that benefit the community. Since there is no state income tax, local governments are authorized to collect taxes.
We’ll explain how property taxes are calculated in Texas, so you can better understand the amount you owe.
How is Property Tax Determined?
Property taxes are based on appraised value. In Texas, all taxable property must be appraised at 100% of the fair market value as of January 1 each year. Market value is the price that it would sell for under current market conditions.
Mass appraisal is the technique used to ensure fair treatment. Property value is determined by the county appraisal district and is based on factors such as size, location, condition, and any improvements or changes made to the property.
Tax rates vary based on the taxing entities associated with each property, including the city, school, and water district. Each entity sets its own tax rate.
To calculate property taxes, tax rate (millage rate) is multiplied by the appraised value. Most homeowners have several taxing entities that are authorized to tax their property. Excluding any exemptions, tax rates and appraised value will be used to determine your property taxes.
How the Texas Property Tax System Works
Here’s an overview of the process that determines what property owners pay in taxes.
The first step in the property tax process is the appraisal of your property. This is done by the county appraisal district (CAD), which determines the value of your property as of January 1 of the current tax year.
The CAD considers factors such as the property’s size, location, condition, and any improvements or changes made to the property.
2. Notice of Appraised Value
Once the CAD has appraised your property, they will send you a Notice of Appraised Value. This notice is sent out in April for residence homesteads. It shows the appraised value of your property and any exemptions that apply.
You have the right to protest the appraised value if you believe it is too high.
Related Post: Why You Should Protest Your Appraised Value
3. Tax Rate
After the CAD has appraised your property, your local taxing units will set their tax rates before September 30, or by the 60th day after the taxing unit receives the certified appraisal roll, whichever date is later.
Taxing units include the county, city, school district, and other local entities that provide services to your area. The tax rate is expressed as a percentage of your property’s appraised value.
4. Tax Bill
Finally, you’ll receive a tax bill that shows the amount of property taxes you owe for the year. This bill will include the total tax rate, the appraised value of your property, any exemptions that apply, and the amount you owe in taxes.
Tax bills are mailed in October to Texas homeowners, and are due immediately upon receipt, although homeowners have until January 31.
How You Can Reduce Your Property Tax Liability
Understanding how property taxes are calculated in Texas can help you better manage your finances and plan for the future. If you have any questions or concerns about your property taxes, don’t hesitate to contact your local appraisal district or taxing unit for assistance.
If you disagree on your property’s appraised value, you have the option to protest your value before an appraisal review board. You’ll need to file a protest with the county appraisal district and provide evidence to support your claim.
You can also hire a property tax protest company to assist with this process. North Texas Property Tax Services’ consultants have decades of industry experience, and they know what it takes to win an appeal. Register your property with our firm to get started.