A Guide to Understanding the July 1st Property Tax Penalty in Texas Header Image

A Guide to Understanding the July 1st Property Tax Penalty in Texas

In Texas, missing the January 31st deadline can lead to penalties, culminating in a significant financial hit on July 1st. In this blog, we’ll provide the details of this penalty, the reasons why it’s crucial to avoid it, and practical tips to ensure you stay ahead of your financials.

What is the July 1st Property Tax Penalty?

In Texas, property taxes are due by January 31st each year. Missing this deadline results in a 7% penalty. From there, interest and penalties continue to accrue, with one of the harshest coming in July for most counties. Those who delay until July 1st will receive a particularly severe penalty, of 15-20% added to the already accumulated fees, making it the biggest hit of the year. This deadline makes it imperative to pay off your property taxes as soon as possible to avoid adding extra strain to your finances.

Breakdown of Penalties and Interest

Here’s a breakdown of the penalties and interest you could face each month if your property tax payments are delinquent up to July.

  • February 1st: 6% penalty + 1% interest = 7% total
  • March 1st: 7% penalty + 2% interest = 9% total
  • April 1st: 8% penalty + 3% interest = 11% total
  • May 1st: 9% penalty + 4% interest = 13% total
  • June 1st: 10% penalty + 5% interest = 15% total
  • July 1st: 12% penalty + 6% interest = 18% total
    • Plus, an additional 15-20% collections penalty

Every month that you’re still past due, your rate will increase by another 2%. The longer you allow delinquent property taxes to go unpaid, the more penalties and interest are added to your bill.

For more information on the specific penalties, learn more from Texas Comptroller.

Potential Consequences of Non-Payment

If your property taxes remain delinquent by July 1st, you could face a substantial 15-20% collections penalty. This penalty is significantly higher than in previous months since it includes the property tax collection penalty used to cover legal expenses, attorney fees, and court costs for the full balance owed. This penalty is in addition to other charges, meaning that by July, your delinquent property tax bill could accumulate up to 41.6% in cumulative interest, penalties, and fees. These penalties can quickly add up, so it’s crucial to settle your property tax bill promptly to avoid this situation or, even worse, foreclosure. Learn more about why it’s important to settle your property taxes before July 1st, by reading our blog here.

How to Avoid the July 1st Penalty

Avoid the July 1st penalty on your property taxes through proactive planning and organization. This is key to staying on top of your financial responsibilities and ensuring a smooth, penalty-free tax payment process. Whether you are currently delinquent on your property taxes or want to prevent future penalties, here are a few helpful tips:

  • Set calendar reminders ahead of January 31st and July 1st
  • Arrange automatic payments through your bank.
  • Confirm with your mortgage company that they are paying your property taxes if they are escrowed.
  • Budget throughout the year to ensure funds are available when the bill arrives.

What to Do If You Missed the Deadline

If you have missed the deadline and are facing penalties, it is important to take immediate action. Depending on your situation, there are several ways to seek assistance. Given the high risk and urgency, a property tax loan might be your best option. At Johnson & Starr, we offer easy-to-understand loans designed to alleviate the stress of overdue property tax bills. We pay off your bill in full and create a personalized repayment plan that fits your needs. Don’t hesitate to learn more about our Texas Property Tax Loans—give us a call today at 888-508-3894.