Texas Property Tax Explained: How It Works in 2025

Texas has no state income tax, but it does have some of the highest property taxes in the country. Understanding how Texas property taxes work – and what exemptions may be available to you – can make a meaningful difference in what you actually pay each year.

How Texas Property Taxes Work

In Texas, property taxes are set and collected at the local level – not the state level. There is no statewide property tax. Instead, multiple local taxing units each set their own tax rates, and those rates are applied to the taxable value of your property.

Common taxing units that may appear on a Texas property tax bill include:

• County government
• City or municipality
• Local school district
• Special districts (water districts, hospital districts, community colleges, and others)

Each of these units sets an independent tax rate. Your total property tax bill is the sum of all the rates that apply to your property, multiplied by your taxable value.

Appraised Value vs. Taxable Value

It is important to understand the difference between your appraised value and your taxable value.

Your appraised value is the market value of your property as determined by your county appraisal district each year.

Your taxable value is lower – it is the appraised value after any exemptions have been subtracted. Exemptions reduce the value on which your tax is calculated, which lowers your tax bill.

The Homestead Exemption

The homestead exemption is the most widely used property tax exemption in Texas. If you own your home and use it as your primary residence, you likely qualify.

For school district taxes, the general homestead exemption is $140,000 as of 2025, following the passage of Texas Proposition 13 in November 2025. This means the first $140,000 of your home’s appraised value is not taxed by your school district.

Many cities, counties, and special districts also offer their own optional homestead exemptions on top of the school district exemption. These vary by location.

The 10% Appraisal Cap

Texas law also limits how fast the taxable value of a homestead-exempt property can increase from year to year. The annual increase in taxable value is capped at 10%, regardless of how much the market value may have risen.

This cap provides meaningful protection in years when home values are rising rapidly. However, it does not apply in the first year you qualify for the homestead exemption, and it resets when a property changes ownership.

Over-65 and Disabled Person Exemptions

Homeowners who are age 65 or older, or who qualify as disabled, receive additional property tax benefits.

• Additional school district exemption: $60,000 on top of the standard $140,000 homestead exemption, for a combined $200,000 reduction in school district taxable value (2025 figures per SB 23)
• School tax ceiling: Once you qualify for the over-65 or disabled exemption, your school district taxes are frozen at the amount you paid in the year you first qualified. Your school taxes cannot increase above that amount as long as you remain in the home, even if rates or values rise.
• Optional local exemptions: Cities, counties, and other taxing units may offer additional exemptions for seniors or disabled homeowners.

Disabled Veteran Exemptions

Texas provides significant property tax relief for veterans with VA-rated disabilities.

• 100% disabled veterans: Fully exempt from property taxes on their homestead
• Partial disability ratings: Exemptions range from $5,000 to $12,000 depending on the disability rating percentage
• Surviving spouses: May be eligible to maintain the exemption in certain circumstances

How Tax Rates Are Set

Each taxing unit adopts its own tax rate, typically in the fall after appraisal values are certified. Texas law limits how much a taxing unit can increase its rate without voter approval.

Rates are expressed as a dollar amount per $100 of taxable value. For example, a rate of $1.20 per $100 means a home with $200,000 in taxable value would owe $2,400 in taxes to that taxing unit.

Your total tax bill adds up the amounts owed to each taxing unit that applies to your property.

County-to-County Variation

Because rates are set locally, property taxes in Texas vary significantly from one county to another. A home of the same value can have a substantially different tax bill depending on where it is located in Texas.

Urban counties with high school district spending and multiple special districts tend to have higher total rates. Rural counties with fewer taxing units and lower spending levels tend to have lower rates.