Property Taxes in Texas Explained

Property taxes-also called ad valorem taxes-are locally assessed taxes. The county appraisal district appraises property located in the county, while local taxing units set tax rates and collect property taxes based on those values. Many taxing units outsource collections to a single entity in the county. Property taxes provide more tax dollars for local services in Texas than any other source-they help pay for public schools, libraries, playgrounds, city streets, county roads, police, fire protection, emergency medical service and many other services.

There are three main parts to the property tax system in Texas:

• An appraisal district in each county sets the value of property each year. A chief appraiser is the chief administrator and operates the appraisal office.
• A citizen board, called the appraisal review board (ARB), hears any disagreements between a property owner and the appraisal district.
• Local taxing units-city, county, school and special districts-decide how much money they will spend by adopting a budget. Next, the units set tax rates that will raise the revenue necessary to fund their budgets. The adopted budgets and the tax rates set to fund the budgets determine the total amount of taxes that a person will pay.

The property tax year has four stages: appraising taxable property, protesting the values and other matters, adopting the tax rates and collecting the taxes. The following represents a summary of the process.

1. A large part of each appraisal district’s job is to estimate what your property is worth on January 1. What a property is used for on January 1, market conditions at that time and who owns the property on that date determine whether the property is taxed, its value and who is responsible for paying the tax. Your appraisal district also processes applications for tax exemptions, agricultural appraisals and other tax relief.
2. Around May 15, the appraisal review board begins hearing protests from property owners who believe their property values are incorrect or who did not get exemptions or agricultural appraisal. When the ARB finishes its work, the appraisal district gives each taxing unit a list of taxable property.
3. In August or September, the elected officials of each taxing unit adopt tax rates for their operations and debt payments. Several taxing units tax your property. Every property is taxed by the county and the local school district. You also may pay taxes to a city and to special districts such as hospital, junior college, water, fire and others.
4. Tax collection starts around October 1 as tax bills go out. Generally, taxpayers have until January 31 of the following year to pay their taxes. On February 1, penalty and interest charges begin accumulating on most unpaid tax bills. Tax collectors may start legal action to collect unpaid taxes on February 1.

Texas has only local property taxes levied by local taxing units. The state does not have current local tax records on each property and its ownership and does not set your property’s value for property taxes nor collect state property taxes.

All taxable property will pay county and school taxes. If the property is located inside a city’s boundaries, you also may pay city taxes. Special taxing units-junior college, hospital district, road district and others-may also tax your property.