I am often asked why property taxes in Texas are so high? The simple answer is because Texas does not have a state income tax and thus our schools, social services, roads, and infrastructure are supported by a property tax.
Although they may seem high, our overall tax burden in Texas is much lower than the national average, especially if you compare it to the 41 states that impose a state income tax.
The three main components of our property tax structure are the county tax, school district tax, and the MUD (Municipal Utility District) tax. MUDs are political entities that provide the water, sewage, and drainage services for a community. Unless the City of Houston is providing you with these services, you will more than likely be receiving them from a MUD.
The combined property tax rate has a range from $2.1 to $3.68 per every $100 of assessed value. The school district and the MUD tax combined represent anywhere from 50% to 80% of the entire tax rate. The MUD tax can range from $0.00 to $1.40. The main factor that causes such a difference in the range of our property tax rates is the MUD.
Typically you will find higher property tax rates in newer subdivisions, because the MUD tax is higher. The MUD’s rate is higher in newer subdivisions since they have to install the infrastructure to support the subdivision. Over time the homeowners pay the MUD for the infrastructure and the MUD tax will decrease. In some of our older subdivisions with homes built in the early 70s have a zero MUD tax.
You may also be eligible for a general homestead exemption. The homestead exemption removes part of the assessed value of the property from taxation. For instance, the general homestead exemption removes 20% of the assessed value of your home from taxation on the Harris County tax. The majority of MUDs do not provide a general homestead exemption. All school districts in the State of Texas are required to provide a minimum of a $15,000 reduction in the assessed value of the property for a general homestead exemption. Some school districts provide an even greater reduction in the assessed value of the property for a homestead exemption.
Qualifying and receiving a general homestead exemption is an easy process but there are certain time frames that must be followed in order for you to receive it.
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If you have additional questions about the homestead exemption or local property taxes, give us a call at 281.300.3141 or 281.804.8626 and we would be happy to help you.