What You Need to Know About Texas Property Taxes

Meghan Thrasher
Apr 16
3 min read

A Homeowner’s Guide to Understanding Texas Property Tax Rates, Exemptions & Payments

If you’re buying, selling, or owning real estate in Texas, there’s one topic you can’t afford to overlook: property taxes. While Texas is known for its lack of a state income tax, that’s balanced by some of the highest property tax rates in the country.

For homeowners in the Dallas-Fort Worth area, understanding how Texas property taxes work is essential to planning your budget, protecting your investment, and avoiding surprises during escrow or refinancing.

Here’s everything you need to know.

1. Texas Has No State Property Tax—But Counties Handle the Load

Unlike some states with centralized systems, Texas property taxes are assessed and collected at the local level. Your bill comes from your county’s appraisal district and funds things like public schools, roads, police departments, hospitals, and city services.

📍 In the DFW area, you’ll most commonly deal with counties like:

Dallas County
Tarrant County
Collin County
Denton County

Each of these counties sets its own property tax rate and oversees the appraisal of home values annually.

2. Texas Property Taxes Are Based on Appraised Value

Your property tax bill is calculated using this formula:

➡️ Appraised Value × Tax Rate = Annual Property Tax

Each year, your local appraisal district determines your home’s market value based on comparable sales, improvements, and land value. If your home’s appraised value goes up, so does your tax bill—unless you qualify for exemptions (more on that next).

💡 Pro Tip: You’ll receive an annual appraisal notice in the spring. If you believe your home was overvalued, you have the right to protest it—often with significant savings.

3. Exemptions Can Lower Your Tax Bill

The state of Texas offers several property tax exemptions that reduce the taxable value of your home—not the tax rate—so you pay less overall.

🔑 Common Texas Property Tax Exemptions Include:

Homestead Exemption: Reduces taxable value on your primary residence by $100,000 (as of 2023)
Over 65 Exemption: Additional savings for seniors
Disabled Person Exemption
Veteran Exemptions: Based on disability rating and military status

🎯 If you just bought a home, make sure to file for your homestead exemption by April 30th of the year following your purchase.

4. Texas Property Tax Rates Vary Widely by Location

Because each taxing entity (school districts, cities, water districts, etc.) sets its own rates, total tax percentages can vary significantly—even between neighboring communities.

🧾 In the DFW area:

Some urban areas (like parts of Dallas or Fort Worth) may exceed 2.5% of assessed value.
Suburban communities with fewer public services may fall closer to 1.8–2.2%.

💡 When shopping for a home, don’t just look at listing price—check the total property tax rate for the specific address.

5. Property Taxes Are Paid Annually—but Can Be Rolled Into Mortgage Payments

Texas property taxes are typically due once per year, with the final payment deadline on January 31st. However, most homeowners pay them gradually through their mortgage escrow account.

🏦 How it works:

Your lender estimates your annual tax bill, divides it by 12, and adds that amount to your monthly mortgage payment. The lender then pays your taxes directly each year.

6. What If You’re Buying or Selling Mid-Year?

When a home is sold, the property tax responsibility is usually prorated between the buyer and seller based on the closing date. Title companies handle this calculation so everyone pays their fair share for the year.

📅 Example: If you sell your home in July, you’ll owe property taxes for January through July, while the buyer covers the rest.

7. Tax Appraisals vs. Market Value: Don’t Confuse the Two

Many Texas homeowners wonder why their tax appraisal value differs from their market value (what they could sell the home for). That’s because the appraisal district’s estimate is just for taxation purposes—it may lag behind true market trends.

🏠 Tip for Sellers: A lower appraised value can be great for taxes but doesn’t reflect your home’s full resale potential. Work with a local expert like Lori Flaherty to get an accurate market valuation when you’re ready to list.

Final Thoughts

Texas property taxes can seem complex—but they don’t have to be a mystery. Whether you’re buying your first home, investing in luxury real estate, or planning your retirement, understanding how these taxes work can help you make smarter, more confident decisions.

Still have questions about how property taxes might affect your home purchase or sale in the DFW area? Contact Lori Flaherty today. With deep local knowledge and years of real estate experience, she’ll help you navigate every step with clarity and confidence.