According to a 2022 study on property taxes by WalletHub, property tax rates in Texas are ranked 7th highest among 51 analyzed tax rates (including D.C). The average Texan pays 58% more in property taxes than the average national taxpayer, and boy are we feeling that squeeze more and more each year.
One of the most asked questions we receive in our office is “Why are property taxes so darn high?” Here are the top 3 reasons why Texans are paying more than the national average.
No State Income Tax
Simply put, Texas has no state income tax and local governments rely heavily on property taxes to fund essential public services. Recent legislation has capped the amount of new revenue local governments are allowed to collect from residents, as a result property tax rates in Texas may decrease but doing so only slows the pace of increasing property taxes, largely because of the red-hot Texas real estate market.
Current Texas Real Estate Market
Property taxes are ad valorem taxes which means “according to value”. In short, there is a direct relationship between the property’s value and the property taxes. The higher the value, the higher the property taxes, it’s that simple. There is a difference between appraised value and the taxable value, the taxable value is the appraised value less any exemptions allowed. If you homestead your primary residence, then you can reduce the amount of taxes you have to pay. Furthermore, if you disagree with the appraised value of your home, you may also file a property tax protest by the deadline.
Tax Rates Are Set by Local Government
The State of Texas places the responsibility of setting tax rates to local authorities. Each one of these taxing jurisdictions examine the financial needs of their operating budgets and debt repayment responsibilities in relation to the total taxable value of all properties located within the jurisdiction. These taxing unit officials must adhere to specific procedures established in the Truth and Taxation Laws when they adopt tax rates.
These local governments are essential to the success of our communities. The services these taxing units provide included public schools, hospitals, community colleges, emergency services, etc. Although property taxes may hurt the pocket book, they are critical to keep these services running.
Take a Proactive Approach to Limit the High Property Taxes in Texas.
Although we cannot control the market or the property tax rates in Texas, we can take a few proactive measures to help reduce your property tax burden. These include having your residential homestead exemption in place and filing your year property tax appeal with the local appraisal district. We have put together some informational blogs on how you can do both actions.
How Alamo Ad Valorem Can Help.
Our sole mission is to assist taxpayers by handling their annual protests. Our clients pay a small fee based on the tax savings we are able to obtain for them, while enjoying the peace of mind that they wont be overtaxed in any given year. Contact us today to see how an experienced Property Tax Consultant can help lower your property tax burden.