How Do You Calculate Your Property Taxes in Texas: A Simple Guide 

If you already own your home, how much your property taxes will cost you each year is vital to ensuring financial readiness and avoiding penalties or consequences from delinquent property taxes. What makes property taxes even more confusing is that they can change every year. How do you calculate your property taxes in Texas? Here’s a simple guide to help. 

What Are Property Taxes? 

Property taxes are essentially a bill based on the value of your property, levied by local governments to fund public schools and local infrastructure. They are especially important in a state like Texas where no state income tax exists. Community services like ambulances, fire departments and road maintenance are all funded by property taxes. 

Key Factors in Property Tax Calculation 

There are several key factors that are utilized in calculating how much you owe in property taxes each year, and they can change depending on inflation, changes in laws, and outside factors like environmental disasters that deplete government funds.  

Assessed Property Value 

Each county has a local assessor that determines your property’s value. This value is influenced by several factors including market trends, location, property improvements, and the overall housing market.  

Local Tax Rate (Mill Rate) 

Each county has a mill rate that is determined each year to calculate property taxes and looks something like 2% of assessed value. This mill rate is set by the local government.  

Your Taxable Value 

There is a difference between the assessed value of your home and its taxable value. After your gross property taxes are calculated there are outside factors that can bring the taxable value down. Examples include exemptions, like the homestead exemption, which removes $100,000 of your taxable value from your property tax calculation, changing your final property tax bill.  

The Property Calculation Formula 

So how is your bill calculated after everything is factored in? It may seem confusing, but it’s fairly simple. Your Taxable Value times the Mill Rate equals your property tax bill.  

So for example, if you own a home that is assessed at $200,000 and its taxable value is $100,000 after the homestead exemption you’ll multiply this amount by your local mill rate. Let’s say your mill rate is 20 mills or 2%, $100,000 x 2% would equal a $2,000 annual tax bill. 

Will My Tax Bill Change? 

Yes. Several factors affect your tax bill each year and each county does have the ability and the right to raise the local mill rate and also reassess your property, raising its taxable value. Therefore, your tax bill can increase each year depending on what’s occurring in your community. You can always contact your local tax assessor’s office to ask them questions about changes in assessments and mill rates. Looking for your local tax assessor’s office? Find yours here.  

Understanding Property Taxes Is Vital 

With property taxes in Texas being some of the highest in the country, it’s vital to understand your property tax bill as part of your yearly financial readiness. Be sure to always review the latest exemptions and changes to assessments and mill rate changes in your area to avoid becoming delinquent on your property taxes. Looking for more resources on property taxes? Johnson & Starr is a leading property tax lender in Texas. Explore our detailed resource section for Texas homeowners here.