Texas is one of the lowest taxed states. It does not impose an individual income tax, and its state sales tax is 6.25%. The tax burden, according to Tax Foundation, was 7.6%, which placed the state in 46th place nationally. But, it's a different picture for homeowners in the Lone Star state when it comes to property taxes. 

If you are looking to own a home in Texas, you should expect to pay one of the highest property tax rates in the United States. According to WalletHub’s 2018’s Property Taxes by State report, Texas is ranked sixth-highest in the country. However, when deciding which state to live in, you should also consider vehicle property tax rates, state income tax rates and state sales taxes. Here is a breakdown of how property taxes in Texas may affect your decision.

Average Property Taxes in Texas

The average effective property tax rate in the Lone Star state is 1.86% of a home’s value. On a median home value, as of 2018 at $250,000, this equates to $4,650. For the average home property assessed value in Texas — $142,700 — the tax average is $2,654.

Fort Bend County is the tenth largest county in the state. It has the highest average effective tax rate of 2.24%. The median home value in the county was $217,600, netting an annual tax payment of $4,879. Ward County placed last, with the lowest tax rate of 0.60%. This county's average home value was $82,000, with an average annual tax payment of $495. 

These effective tax rates include multiple categories of assessed property taxes that are applied by different authorities within different regions. First, cities within Texas can assign up to 2% taxes to a property’s value, included in the real estate tax; but this is, in effect, a sales tax. Counties within Texas have a further option of imposing up to 1.5% on a property’s value, transit authorities can impose a 1% added tax on property values for homes in their districts, and Special Purpose Districts can impose up to 2% within their districts. School districts also can add a tax rate if they so choose.

All of these tax assessments make up the basic property tax rate and are assessed on a property’s market or assessed value. There is no state-wide tax rate in Texas, only local taxing units, such as those mentioned here.

How Property Taxes Are Calculated in Texas

All residential homes are appraised each year by county assessors. All homes are appraised at the beginning of the year. Homeowners receive their tax bills in October, and are expected to pay their bills at the end of January the next year. 

Exemptions can help homeowners lower their tax bills. A homestead exemption for a primary, owner-occupied residence can net a homeowner at least $25,000 in exemptions. This exemption, however, only applies to the school district tax. So a school district tax rate will only apply to $100,000 on a home valued at $125,000. Similarly, homeowners over 65 and those who are disabled can claim an additional $10,000 exemption. Like the homestead exemption, this one also applies only to the school district tax.  

How Texas Compares to its Neighboring States

The neighboring states to Texas, from strictly a property tax rate, do not have such high taxes. Oklahoma's rate of 0.87% was lower than Texas, while New Mexico was still lower at 0.76%. Arkansas is the eighth-least taxed on property at 0.63%, and Louisiana is the third-cheapest property tax rate state in the country at only a 0.51% effective tax rate. The national average for the effective property tax rate is 1.21%. 

Other counties within Texas are cheaper than the national average tax rate, but these are generally more rural counties with less population and community services.

How Texas Compares to the National Average

The national average of property taxes is $2,720 annually at 1.21% of assessed value. The average property tax rate in Texas is 60% higher than the national average and is one of the top five highest-paying states for property tax. Texas also makes Bankrate.com’s Terrible 10 list of most regressive state tax systems in the United states, ranking at No. 5 with a total effective tax rate on the middle class of 8.8% including property, vehicle, income and sales taxes. Even though Texas does not have income or vehicle property taxes, it still ranks as one of the most taxed states in the country.


Virginia Property Tax Guide

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