How Property Taxes are Calculated in Texas

Today, we’re talking about something every homeowner needs to understand: how property taxes are calculated and how exemptions can save you money. So then, how is your property tax bill calculated? Let’s keep it simple. Your property tax bill is determined by this equation: taxable value x tax rate = your property tax bill. But it’s never quite that simple with taxes is it?

Arriving at Value

First, the appraisal district assesses the market value of your property each year. This is known as the appraised value. But the good news is, you may not have to pay taxes on that full amount. That’s where we have to look at your appraisal district roll, to see what local taxing units (otherwise known as entities) your property is subject to. Let’s take a look at an example.

123 Red Maple Dr. is appraised at $350,000. The owner of the property pays taxes to four entities: Katy ISD, the Fort Bend Drainage District, the Fort Bend General Fund, and Fort Bend MUD 151.

Now, state law requires local school districts to give homeowners a $100,000 exemption for their primary residence, meaning where you live full time. What that does is lowers the taxable value for the school district portion of your taxes.

Often times, other entities offer additional tax exemptions for further savings. In the case of our example, both the Fort Bend Drainage District and the Fort Bend General Fund offer a 20% reduction on the taxable value for their portions.

As for the last taxing entity in our example, the Fort Bend MUD 151? It is rare to find MUD districts offering any additional property tax savings. One thing you should note here – the taxing units (or entities) will vary widely – sometimes even in the same neighborhoods, so it’s important to review your specific tax roll, understand who you’ll be paying taxes to, and whether or not they offer homestead exemption savings.

Tax Rates

Next, let’s talk about the tax rates. Different entities – like your school district, county, and city — each set their own rates. These rates are combined to give you a total property tax rate. In our example, 123 Red Maple Dr. pays the following: Katy ISD: 1.1194 per $100. Fort Bend County Drainage District: $0.0124 cents per $100. Fort Bend General Fund: $0.4265 cents per $100, and Fort Bend MUD 151: 0.82 cents per $100. All combined, our total tax rate is $2.3783 per $100 of taxable value.

Then it’s just simple math: For Katy ISD, with our $100,000 exemption, we’ll take our $350,000 appraised value, subtract our $100,000 homestead exemption for a taxable value of $250,000. We’ll then divide that by 100 and multiply it by $1.1194 for a total of $2,798.50. For the Fort Bend Drainage District and the Fort Bend General Fund, each of which offer a 20% exemption, those equate to $22.32 and $767.70 respectively. Lastly, the Fort Bend County MUD 151, with no exemptions, equals $2,870. And when we add that all up, we have a total tax bill of $6,458.52 – due by January 31st.

How much will I save?

Now, to understand how much savings your homestead exemption equates to, let’s take our original assessed value of $350,000, divide that by 100, and multiply the result by our total tax rate of $2.3783. Without a homestead exemption, that’s a total tax bill of $8,324.05 – a full $1,865.53 more than if you had a homestead exemption.

Now, don’t forget – you need to apply for exemptions through your local appraisal district. Once approved, they stay in place until you claim another property as your primary residence. You should also speak with your local appraisal district about additional exemptions that you may qualify for. Disability exemptions, homeowners over the age of 65, disabled veterans, and even their surviving spouses all may qualify for additional property tax savings.

Understanding property taxes can help you budget better and save money. If you have any questions or need help with your exemptions, feel free to reach out. I’m always here to guide you! Thanks for watching – and don’t forget to like, subscribe, and stay informed!”