How Property Taxes are Determined

Woman looking at property tax documentsIf you’re confused by your annual property taxes, you’re not alone. More than one property owner has reached out to us after budgeting for their annual property taxes only to be unpleasantly surprised when they owe significantly more. Don’t let your annual property taxes take you by surprise. In this post, we’ll review how Texas property taxes are calculated, discuss some of the highest taxed counties, and help you to better understand how the Home Tax Solutions team can help.

Understanding the Mill Levy

In order to accurately determine your annual property tax, you’ll need to begin by understanding the Mill Levy. The Mill Levy is the amount of money needed to cover annual expenses within a tax district. This number is calculated by determining how much revenue each taxing jurisdiction needs to run smoothly without incurring debt. This amount is determined by review board meetings within local governments, and property owners in the district should be informed about the time and location of those meetings where the budget is determined. Then, the annual projected budget is divided by the total value of the property within the area, which will be further discussed below. Finally, special tax districts, like schools, counties, and cities, are added to the overall jurisdiction taxes, to determine the total Mill Levy.

For property owners that means you need to know the city, county, and special district tax rates to accurately estimate your property tax percentage. It also means you should be a little more interested in your local government. Make sure you’re paying attention to budget meetings, and you should consider actually attending these meetings whenever possible.

Your Property Value

Each year, your property value is assessed by the county appraisal district. This appraised value is the number added to the total county property values to determine the Mill Levy, and it is the value that will be used to determine your taxes. For example, a homeowner with property valued at $100,000 in an area with a 1.5% tax rate will pay $1,500 in annual property taxes.

The Property Tax Calendar

It’s no secret that delinquent property tax fees are high, and they add up fast. Home Tax Solutions is here to help with low interest loans if you ever get behind, or you just want to stay ahead! Many people aren’t really sure when specific property tax decisions are made. Below, we’ve broken down the property tax year to help you plan ahead:

  • January to May – property values are assessed by the appraisal district
  • May to July – budget review board hearings begin
  • August to September – public meetings and annual tax rate announcements are made
  • October 1st – tax bills are mailed out
  • January 31st – tax bills are due

Texas Counties with Highest Property Tax Rates

The national property tax average is 1.19%. The average in Texas is 1.86%, but there are many counties that come in well above this number. In fact, some Texas property owners pay a tax rate that’s more than double the national average. Below, we’ve outlined some of the highest taxed counties in Texas. A higher number of special tax districts is one of the main reasons many of the residents of these Texas counties find themselves paying such high rates, so pay attention to these special districts if you’re looking to invest in a new property.

  • Harris County – has some of the highest tax rates in Texas and the US. The average Harris County resident pays 2.12%, but residents of Houston pay 2.21% or higher.
  • Dallas County – the average rate for the county is just 2.06%, significantly less than the average in Harris County, but city of Dallas residents pay 2.32% property tax (before levies). The school district tax alone is 1.28%
  • Tarrant County – containing both Fort Worth and Arlington, the average tax rate in this county comes in at 2.22%, but if you own property in either of the two major cities, your taxes will be even higher. Fort Worth residents pay an average of 2.4% and Arlington residents pay 2.25%.
  • Bexar County – property owners in the fourth largest Texas county paid a 2.38% tax rate in 2018 before levies.
  • Travis County – the average rate in Travis County is just 1.87%, but if you live in Austin, you’re looking at 2% or higher rates, including special districts.
  • El Paso county – bordering both Mexico and New Mexico, El Paso County property owners pay an average 2.17% tax rate.
  • Collin County – though it only has the 6th highest population, Collin County has the 4th highest tax rate in Texas. The base tax rate is just 1.96% in 2018, but the school district levies raise that rate significantly in growing cities like Plano, which has an average tax rate of 2.43%.
  • Hidalgo County – the average Hidalgo County property owner pays a tax rate of 2.0% -the tenth highest rate in Texas.
  • Denton County – another of the DFW Metroplex counties, property owners pay an average tax rate of 1.98%. Those who own property in the city of Denton will pay a significantly higher rate – 2.42%.
  • Fort Bend County – the 10th largest county, it has the highest average tax rates of 2.24%. The largest city, Sugar Land, has a 2.09% tax rate before adding in any of the county’s more than 200 special districts.

Budgeting for Your Property Taxes

Before you start budgeting for your property taxes this coming year. You should take a look at your tax credits and deductions. Work with a financial advisor or another specialist to ensure you’re taking advantage of the potentially $1,000s of dollars in savings available for Texas property owners. When you’re ready to get started budgeting for your annual Texas property taxes, call Home Tax Solutions. We work with residents in all 200+ Texas counties to spread the costs of their property taxes out over the course of the year with monthly payment plans and low interest rates. Don’t let high property taxes discourage you from investing in a Texas home or business. Instead, let the specialists at Home Tax Solutions help!