Texas Property Taxes & Tax Exemptions in 2025

Texas might seem like a tax haven for residents, with no state income tax, until you factor in the Texas property tax. Not only is Texas’ property rate one of the highest in the country, overtaking California by a large margin, but the taxation process is also quite complex. Real estate accounting is a complex process in itself; the tax structure in Texas makes it even more challenging to navigate. Here’s everything you need to know about Texas Property Taxes & Tax Exemptions in 2025

The state of Texas approved a constitutional amendment in 2023, which set the homestead exemption to $100,000. Another vote in November 2025 could raise it to $140,000 or even $150,000! Which could mean huge relief to Texans. Here’s a simplified explanation about Texas property taxes and exemptions you could use to manage tax liability. This article has been composed in a Q&A format to help address queries you may have on the subject.  

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Overview of Property Taxes in Texas

Texas’s property rates vary by area, county, and municipality. The statewide average rate can be approximated to be between 1.47% and 1.36%. In certain areas, you might be paying higher than 1.47% as well. Most homeowners can expect an effective rate between 1.6% and 2.5%. Some advocacy groups cite even higher averages, ranging from 1.8% to 2.0%, depending on the methodology. Some special districts or hefty school levies could potentially charge over 2%.

Local Variation with Recent Estimates (2025)

High-rate areas:

• El Paso: ~2.6%
• McAllen: ~2.3%
• Pearland: ~2.2%
• Beaumont: ~2.1%
• San Antonio: ~2.03%

Lower-rate suburbs include:

• Celina: ~1.7%
• Anna: ~1.6%
• Aubrey: ~1.4%
• Cedar Hill: ~1.2%

There are no state-level property taxes; however, all levies are set by local entities, i.e., cities, counties, school districts, and utility districts. Some fast-growing urban/suburban counties exceed 2% due to combined local assessments.

Interesting fact: Texas’s property tax rates primarily fund public services, like schools, infrastructure, and emergency services, as the state does not have a state income tax. The tax funds about 50% of public-school budgets, making school districts the most significant component of your tax bill, if you are a Texan.

Why are property taxes going up in Texas?

1. Escalating Property Values

Property values in cities like Austin, Dallas, Houston, and the Hill Country have surged due to population growth and a strong market function, characterized by high demand. This increases the assessed value of properties. Higher valuations mean your tax bill goes up! Unless offset by exemptions.

2. Reliance on Property Tax for Public Services

Texas doesn’t impose a state income tax, making local governments heavily dependent on property taxes to fund schools, police, infrastructure, and other services. As the demand for public services increases, jurisdictions collect more, thereby elevating the property tax burden.

3. Increasing Local Government Levies

City, county, school, hospital, and other district budgets have grown, often exceeding state revenue caps. Hence, rising local government levies

4. Legislative tax-reform trade-offs

The Legislature has enacted an increase in the homestead exemption, setting the exemption at $100,000. It’s likely to rise to $140,000 or even $150,000 by November 2025. However, even as school districts receive more homestead exemptions, other taxing authorities continue raising valuations and levies, often negating the relief.

5. Rising Local Expenditures & Services

Cities and counties are expanding their budgets by hiring additional staff, raising wages, funding new initiatives, and addressing infrastructure, homelessness, and emergency response, among other needs, all financed through local taxes. Annual revenue requires a rise, driving property tax collections up, even under caps.

6. Pandemic and Inflation Pressures

Recovering from a COVID-impacted period resulted in revenue shortages, and inflation-driven service costs led to budgetary increases, which were funded by higher property tax levies.

What are some Texas Property Tax Exemptions in 2025?

1. Homestead & Additional Residence Exemptions

A. General Residence Homestead

• School districts are required to provide a flat exemption of $100,000.
•  Counties that impose flood or farm-to-market taxes must offer $3,000 in exemptions.
• Other local taxing entities (such as cities and MUDs) can provide exemptions up to 20% of the property’s value, with a minimum exemption of $5,000.      

B. If you are over 65 or a Disabled Homeowner

• An additional exemption of $10,000 on school taxes is mandated.
• Local taxing entities may offer further exemptions with a minimum of $3,000.

C. Disabled Veteran & Spouse

• There may be partial or complete exemptions based on the veteran’s disability rating from the VA. 
• Veterans who are 100% disabled (or their qualifying surviving spouses) can receive a full residence exemption.   

D. First Responder / Soldier Spouse

• Surviving unmarried spouses of first responders or military personnel who died in the line of duty are eligible for a 100% exemption. 

E. Upcoming Increases (Pending)

• The November 2025 ballot Proposition 13 proposes increasing the homestead exemption to $140,000 for all homeowners and up to $200,000 for seniors and individuals with disabilities, pending approval.

2. Agricultural / Open‑Space (Special Valuation)

• Farmland, timberland, and wildlife management land can qualify for a productivity appraisal, which reduces the assessed value based on use rather than market value. 
• Applications must be made locally (forms differ), typically within the Feb 1–Apr 1 timeframe.

3.  Residential Tax Deferral

• Homeowners who are 65 years or older, disabled, or veterans with disabilities may postpone extra taxes beyond the capped amount (a maximum of 105% of the previous year’s value plus any new improvements). 
• Interest on deferred taxes accumulates at an annual rate of 8%.

4. Appraisal Protests and Appeals

A. When to Protest

• A Notice of Appraised Value must be received by May 1 (or by April 1 for residences). A protest should be filed if the property appears overvalued or inequitably assessed. 

B. Filing Steps 

1. Fill out Form 50- 132 (Notice of Protest) or a comparable local form. 

2. Submit the form by May 15, 2025, or within 30 days after the notice, whichever is later. 

3. Request an informal review and then attend the ARB hearing with your documentation. 

4. If you are not satisfied with the outcome, you can appeal to the District Court, SOAH (for valuations greater than $1M), or opt for binding arbitration. 

5. Tax Abatements & Incentives

• Local governments have the option to provide tax abatements or tax increment financing (TIF) for economic development initiatives (like commercial or industrial projects). 
• The benefits and application procedures differ by locality (consult local economic development offices for details).

6.  Energy Device Exemption

• Individuals who install solar or wind-powered systems can exempt those assets from value under Section 11.27. 
• The local Form 50 123 must be filed.

7.  Charitable / Nonprofit Exemptions

Charitable organizations recognized by the federal government, along with religious and educational entities, may obtain an exemption after fulfilling specific criteria.

To summarize, here is how to minimize tax liability:

1. File the homestead and relevant additional exemptions ASAP.
2. Consider agricultural valuation if the land is qualifying.
3. Protest any inflated appraisals before the May 15/K local deadline.
4. Leverage deferral options if applicable.
5. Stay updated on ballot measures improving exemptions in November.

Are Texas property rates based on the market value or appraised value?

The property value in Texas is based on the appraised value of your property, as of 1^st of January of the specific tax year.  However, the appraised value is intended to represent the market value by the Country Appraisal District (CAD). However, the Taxable Value can be reduced based on applicable exemptions

Does Texas have the highest property tax? How does it compare to Arizona and California?

Texas does not have the highest property tax in the U.S., but it’s among the top-tier states when it comes to effective rates. Here’s how it compares to Arizona and California.

California caps the general property tax at 1% of the market value, with an annual value increase limited to 2% due to regulation under Proposition 13.

Arizona imposes relatively low rates (0.44–0.56%), with caps on local government levies; Maricopa County averages just 0.51%.

Conclusion

If you’re evaluating a property in Texas in 2025, expect effective property tax rates to land around 1.5%–1.8%, though your specific rate could be higher. Some special districts or hefty school levies could potentially charge over 2%. Here’s where Profitjets can make a difference: Our expert team handles tax planning and tax compliance seamlessly. We can help you calculate your specific tax rate and minimize your liability. We also provide outsourced accounting and bookkeeping services, and tax services to meet your accounting needs. We have over 15 years of experience and a track record of more than 600 satisfied customers, who stand as testament to our proficiency and accuracy.