According to several reports and studies on the subject, Texas municipalities do indeed have some of the highest property taxes in the United States. Texas relies heavily on property taxes to fund the operation of cities, counties, and public education. Interestingly, in a survey conducted by real estate investing website Roofstock in late 2020, it was shown that the city with the highest property taxes was not in Texas (it was Milwaukee, WI, with an effective rate of 2.17%). However, among the remainder of the top ten, seven were in Texas: El Paso (2.13%), Fort Worth (1.86%), San Antonio (1.85%), Arlington (1.75%), Austin (1.53%), Dallas (1.49%), and Houston (1.48%). These effective tax rates have been adjusted to reflect that properties are generally appraised for less than their true market value.
This means that if you own a home valued at $ 200,000, you will pay between $2,960 and $4,260 per year, depending on what city you live in. Your taxes may be far greater if you are truly appraised at the property’s market value as opposed to the appraisal district value, which generally lags the market.
Aside from the rate of taxation, the biggest matter of contention is the method of appraisal, and the values used to appraise property taxes. The rates are just one part of the formula. A property’s assessed value in a given tax year is also key. Tax rates are adjusted annually, but typically have small annual changes.Assessed values, however, are subject to wide variability and error and can be contested.
Property taxes are appraised annually by county appraisal districts. Each appraisal district must determine the property’s current market value in the county and then base the tax rates on these values. The variables considered in the appraisal are property size, usage, construction type, sales of comparable properties, age, location, and individual characteristics of the property. The appraisal values determined by the county officials can be disputed informally or formally via appraisal review boards. Once the rates are fixed, tax bills are sent out in October or November, and payment is due by January 31. Texas county appraisal districts levy taxes as a percentage of each home’s appraised value. That percentage differs from county to county and even within different parts of respective counties, so to estimate what your tax bill will be, you need to know what the rate is in your particular taxing jurisdictions.
Although each county or tax district is responsible for appraisals within its own jurisdiction, there are guidelines at the state level that determine the ways in which these appraisals are carried out. The provisions of Tax Code Section 23.01, regulated by the comptroller, help to ensure that all Texas properties are appraised on equal terms.
As stated above, Texan cities charge some of the highest property taxes in the country. However, the question of just where the state is positioned relative to the other 49 is not as straightforward as it may seem. The simplest answer is that Texan homeowners pay the sixth-highest property tax bills on homes valued at the median national value. However, home values vary from state to state, skewing the data. When we adjust each state’s median home value, Texas drops down to number 15 on the list. Whether considering the tax rate paid on a national median value or adjusting for state median home values, New Jersey still ranks as the state with the highest property taxes. According to state median home value, Texas ranks below Connecticut, New Hampshire, New York, Vermont, Illinois, and Wisconsin, among others.
As mentioned above, Texas ranks at number 6 in the country when assessed according to the national median and 15 according to state median home values. On both of these lists, New Jersey is at number 1. According to the state median home value, the top five (in descending order) are New Jersey, Connecticut, New Hampshire, New York, and Massachusetts. According to national median values, this changes to New Jersey, Illinois, New Hampshire, Connecticut, and Wisconsin.
At the bottom of the list, according to state median values, are - in ascending order - Alabama, West Virginia, Arkansas, Louisiana, and South Carolina. On national values, the bottom five are Hawaii, Alabama, Louisiana, the District of Columbia, and Colorado.
Interestingly, one city in the state has not charged property tax for over two decades. Although it is located in Fort Bend - the third highest county by property tax rate, Stafford eliminated its property taxes under long-serving mayor Leonard Scarcella. Scarcella set out to end the municipality’s reliance on property taxes. Instead, the city draws most of its income from municipal sales tax. However, even though the city does not levy sales tax, the county and school district still continue to do so.
The main reason property taxes are so high in Texas is that the state does not charge its residents any income tax. Cities, counties, and school districts still need to fund their public spending somehow, so they rely on property taxes to generate income.
There are currently seven states that do not levy any income tax at all. In addition to Texas, they are Alaska, Florida, Nevada, South Dakota, Tennessee, and Wyoming. New Hampshire does tax income earned from dividends and interest but does not tax earned income. Washington is primarily an income-tax-free state, but it does levy taxes on capital gains for certain high earners.
Texas does rank pretty high when it comes to property tax. It is the sixth highest based on national median property values and 15th when the figures are adjusted for variations in median values from state to state. It is not among the highest-ranking states, such as New Jersey and Connecticut, but it is also quite far from the bottom. On the whole, Texas property owners do face quite a high property tax bill compared to many other Americans.
American Finance & Investment Co., Inc. (AFIC) offers our clients an affordable, hassle-free way to manage their Texas property taxes and avoid crippling penalties and interest. We can ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you. AFIC can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits: Quick and completely online process No money down No credit check Free 30-day rate match Match competitors and beat their rate by 1% Avoid high penalties and foreclosure We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans to help you manage your payment of property taxes in Texas, please contact our experienced team at AFIC today.
Rates as Low as 8.0% (8.51% APR*) $25,000 loan,
$750 in Closing Costs, 120 Monthly Payments of $303.32
Get your estimate in under 1 minute!
Fill out the form below to start your loan quote
Proudly Serving Austin (Travis County & Williamson County), Dallas (Dallas County), El Paso (El Paso County), Fort Worth (Tarrant County), Houston (Harris County, Fort Bend County, & Montgomery County), the Rio Grande Valley (McAllen, Pharr, Hidalgo County, & Cameron County), San Antonio (Bexar County), Waco (McLennan County) and the rest of Texas with Property Tax Loans.
YOUR TAX OFFICE MAY OFFER DELINQUENT TAX INSTALLMENT PLANS THAT MAY BE LESS COSTLY TO YOU. YOU CAN REQUEST INFORMATION ABOUT THE AVAILABILITY OF THESE PLANS FROM THE TAX OFFICE.
If you are over 64 or disabled, don’t get a property tax loan, contact your tax office about a deferral.
OCCC License #159698 • NMLS #1778287