Published , 4 minute read
How Texas property taxes are calculated, why rates vary so much across DFW, the new $140,000 homestead exemption, and how to estimate taxes before you buy.
Quick answer: Texas has no state property tax, but local governments — school districts, cities, counties, and special districts — each set their own rates. Combined rates across DFW commonly land somewhere around 1.5% to 2.5% of a home's taxable value, and newer communities with special districts can be higher. Since November 2025, Texas homeowners get a $140,000 homestead exemption from school district taxes on their primary residence, plus an additional $60,000 for homeowners 65 and older or with a qualifying disability.
How Texas property taxes are calculated
Your tax bill is based on two things:
- Appraised value — set each year by your county appraisal district (for example, Collin Central Appraisal District or Dallas Central Appraisal District).
- Tax rates — set by each taxing unit that covers your address.
A single home might be taxed by:
- The county
- The city
- The independent school district (ISD)
- A community college district
- A hospital district
- A Municipal Utility District (MUD) or Public Improvement District (PID), common in newer neighborhoods
Each rate is applied to your taxable value after exemptions, and the results are added together.
Why two similar homes can have very different tax bills
Two $450,000 homes a few miles apart can have noticeably different tax bills because of different city rates, school district rates, and special districts. New-construction communities in fast-growing areas like Prosper, Celina, Princeton, and parts of McKinney and Frisco often include a MUD or PID, which funds roads, water, and utilities and adds to the total rate.
Before you make an offer, ask your agent or loan officer for the property's actual combined tax rate, not an area average.
The Texas homestead exemption (updated for 2025–2026)
A homestead exemption reduces the taxable value of your primary residence.
- In November 2025, Texas voters approved Proposition 13, raising the school district homestead exemption from $100,000 to $140,000, effective for the 2025 tax year.
- Proposition 11 raised the additional exemption for homeowners 65+ or with a disability from $10,000 to $60,000, for a combined $200,000 school district exemption.
- Some cities, counties, and school districts offer additional local exemptions.
- Homesteads also get an appraisal cap: the taxable value of your homestead generally can't increase more than 10% per year (not counting new improvements).
You must apply for your homestead exemption with your county appraisal district. It isn't automatic when you buy a home.
A simple example
Say you buy a $450,000 home as your primary residence.
- For school district taxes, $140,000 is exempt, so the school rate applies to $310,000.
- The city, county, and other rates apply to your value minus any local exemptions those units offer.
This is why your actual bill will be lower than "price × total tax rate." Your loan officer can estimate it using the property's real rates.
What new buyers need to know
Your first-year escrow may be based on the seller's bill. If the seller had exemptions you don't qualify for (like the over-65 exemption), your taxes may go up the following year. This can create an escrow shortage and a higher payment in year two. Ask your loan officer to estimate taxes without the seller's exemptions.
New construction is often taxed on land only in year one. When the home is completed and reappraised, the bill can jump significantly. Plan your budget on the full, finished value.
You can protest your appraisal. Each spring, appraisal districts mail value notices. If you believe your value is too high, you can file a protest, typically by May 15 or 30 days after your notice is mailed, whichever is later.
Taxes are paid once a year. Texas property taxes are generally due by January 31. Most buyers pay them monthly through their mortgage escrow account.
FAQ
What is the average property tax rate in Dallas County? It depends on the city and school district. Look up the specific property on the appraisal district's website or ask your loan officer for the property's combined rate.
Do property taxes go down when I turn 65 in Texas? Homeowners 65+ get an additional school district exemption and a school tax ceiling on their homestead. Apply through your appraisal district.
Do I need to reapply for my homestead exemption every year? Generally no, once it's approved, unless your appraisal district requests it or you move.
Are Texas property taxes higher than other states? Texas property tax rates are among the higher ones in the country, partly because Texas has no state income tax. Looking at your total tax picture is more useful than comparing property taxes alone.
Want a real tax estimate on a home you're considering? Call or text Mike Tanas at 214-604-5245
This article is general education, not financial, tax or legal advice. Guidelines change and vary by lender. Talk with Mike about your own situation.