The Basics of Texas Property Tax (2026)

Property taxes have been a big part of Texas’ state revenue for a very long time. They’re one of the things that makes Texas so great, because they encourage residents to do something with their land, not just sit on it.

By learning a bit more about the intricacies of the property tax system, you can better take advantage of its benefits and avoid some of its pitfalls.

Defining Our Terms

The first thing we need to define is taxing entities, sometimes called taxing jurisdictions. These public entities propose their tax levies on property owners, which the local government votes into place. The most typical entities are:

ISD (Independent School District) tax

• hospital tax

• community college tax

• city tax

• county tax

Usually in Texas you have five or six of these, or if you live in Harris County as many as 13. Each entity’s taxes make up a couple of percentage points that, when added up, equal your total property tax rate, typically around 2.5%. This is why you could have a $100,000 house that gets taxed around $2,500 a year.

The next thing you need to know is the difference between market value and assessed value. Some of you may see “appraised value” on your value notice instead of “assessed value.” That’s simply a useless distinction the appraisal district makes on words that are essentially synonymous. You’ll notice that I use “assessed value,” not appraised value. It’s a better term, so I’m going to use it.

“Appraised value” vs “assessed value” is a useless distinction the appraisal district makes on words that are essentially synonymous.

Basically we have three words that could mean the same thing: market, appraised, assessed. Before I define these terms, let me explain their relationship. All three terms are used to define two things: (1) What your appraisal district thinks your property is worth and (2) the value they are allowed to tax you on. If you have a commercial property, you don’t have to worry about what the difference is as they are the same. Now that you know the relationship, here’s the breakdown of the terms I promised.

• Market Value – This always means what the appraisal district thinks you could sell your property for.

• Appraised Value – This sometimes means the above and sometimes means the below.

• Assessed Value – Finally a clear term! This is the amount you have to pay taxes on.

One easy way to remember it: whichever number is higher than the other is the value the appraisal district thinks you can sell your property for (market value). Whichever number is lower is the amount you’re paying taxes on (assessed value). If they are the same, then you are not capped by an exemption and don’t even have to worry about it.

Exemptions

When it comes to exemptions, if the appraisal district will allow you to claim it, you should take advantage of it. For our purposes, we’ll just focus on two of the most popular types: homestead exemptions and over-65 exemptions .

Homestead Exemption

So you want to be a homesteader – it used to be so much cooler. Roll into Wyoming, build a fence, die of cholera – those were the days! Now it just means you’ve filed for a homestead exemption because you live in a house. But unlike commercial or rental properties, living in a home brings some great tax savings. As of 2026, the school district homestead exemption is $140,000 off your ISD taxes under SB 4 (Proposition 13), up significantly from prior years. The rules around this change regularly in each district, and there is almost no normalization, so it’s not worth getting into too much detail. The key takeaway is that a homestead exemption will definitely reduce your tax burden.

An additional benefit of a homestead exemption is that the appraisal district isn’t allowed to raise your taxable value more than 10% per year. So, in a given year, if your market value increases more than 10%, your assessed value gets capped at 10% higher than your assessed value was last year. Don’t you wish you could cap all of your property tax increases? Me too, but unfortunately only one homestead exemption is allowed per person and it is supposed to be placed on your primary residence.

2025 Legislative Update

In 2025, the Texas Legislature passed SB 4 raising the mandatory school district homestead exemption from $100,000 to $140,000, effective for the 2025 tax year and forward. Qualifying seniors and disabled homeowners now receive an additional $60,000 school district exemption on top of the standard $140,000, for a combined $200,000 in school district exemptions. These changes are applied automatically if your homestead exemption is already on file. Even with these larger exemptions, a successful protest still reduces your appraised value, which is the number these exemptions are subtracted from.

Over-65 Exemption

If you can file an over-65 exemption, congratulations! First of all, you have more years of wisdom than the rest of us, and your ability to freeze your taxes means you’re probably making a killing in the bank. I envy you. By filing this exemption, your tax burdens will stay frozen in whichever taxing entities honor the over-65 exemption. On top of the $140,000 general homestead exemption, qualifying homeowners receive an additional $60,000 off school district taxes, plus a freeze on ISD taxes. When you add up ISD taxes and your other freeze-honoring taxing entities, you’re looking at freezing about 2/3 of your taxes, which is great because taxes usually go one direction: up.

There is so much more to learn about property tax, but hopefully you have a better grasp of the basics. The Texas tax system is a little wonky, I get it. Though sometimes it seems unfair, it does help drive our state’s economy and offers a statistically much lower tax burden than other states. Before complaining about your property tax, call your cousin in California.

What is the difference between market value and assessed value in Texas?

Market value is what the appraisal district believes your property could sell for. Assessed value (also called appraised value or taxable value depending on context) is the value your property taxes are actually calculated on. For most commercial properties these two numbers are identical. For homesteaded residential properties, the assessed value can be lower than market value due to the 10% annual cap on increases.

What is a taxing entity in Texas?

A taxing entity is any government body authorized to levy property taxes in Texas. Most Texas property owners pay taxes to five or six entities simultaneously: a school district (ISD), a county, a city or municipality, a community college district, and a hospital district. In Harris County, homeowners can face up to 13 separate taxing entities. Each entity sets its own tax rate and the combined rates form your total effective property tax rate, which averages around 2.0 to 2.5 percent across major Texas metros.

What is the homestead exemption in Texas?

The Texas homestead exemption reduces the taxable value of your primary residence for school district tax purposes. As of the 2025 tax year, the mandatory school district homestead exemption is $140,000, meaning your home’s value is reduced by $140,000 before school district taxes are calculated. The exemption is available only on your primary residence and must be applied for through your county appraisal district. An additional benefit is that it caps the annual taxable value increase at 10% per year.

What is the over-65 exemption in Texas?

Property owners aged 65 or older qualify for an additional $60,000 school district exemption on top of the standard $140,000 homestead exemption, for a combined $200,000 in school district exemptions. Many taxing entities also honor an over-65 freeze that locks your school district tax bill at the amount it was in the first year you qualified. This means ISD taxes will not increase as long as you own and live in the home.

How is property tax calculated in Texas?

Texas property taxes are calculated by multiplying your property’s assessed value by the combined tax rate of all applicable taxing entities. For example, a home assessed at $400,000 with a combined rate of 2.2% would generate an annual tax bill of $8,800. A successful protest that reduces the assessed value to $370,000 would reduce the bill to $8,140, saving $660 annually. That savings compounds each year because the lower assessed value becomes the starting point for future appraisals.

Ready to Lower Your Texas Property Taxes?

The May 15th deadline is approaching. Resolute’s team of former appraisal district insiders is ready to fight for every dollar you deserve.