How Texas Property Tax Rates Are Set (And Why They Change Every Year)

How Texas Property Tax Rates Are Set (And Why They Change Every Year)

Many homeowners focus only on their appraised value — but your tax bill depends on two parts: value and rate. Even if your property value stays the same, changes in Texas property tax rates can increase or decrease what you owe.

Understanding how rates are set each year helps you make sense of rising tax bills and prepares you for future changes.

Property Taxes in Texas Are Set Locally, Not by the State

Texas does not have a state property tax. Instead, local taxing entities determine their own rates each year.

These entities typically include:

• School districts
• Cities
• Counties
• Community college districts
• Municipal utility districts (MUDs)

Each one adopts its own rate based on its budget needs.

How Texas Property Tax Rates Are Calculated

Every taxing entity follows a similar formula:

Total Budget Needed ÷ Total Taxable Property Value = Tax Rate

If a city needs $10 million and the total taxable value in that jurisdiction is $1 billion, the rate adjusts to generate that revenue.

However, this process includes safeguards designed to limit sudden increases.

The “No-New-Revenue” Rate Explained

Each year, taxing authorities calculate what is called the no-new-revenue rate.

This rate would generate the same amount of tax revenue as the previous year, excluding new construction. If property values rise across the area, the no-new-revenue rate typically drops to offset that growth.

In theory, this prevents governments from automatically collecting more money simply because values increased.

The Voter-Approval Rate

Taxing entities can also adopt a higher rate, up to what’s known as the voter-approval rate. If they exceed that threshold, voters may petition for an election to approve the increase.

This process is part of Texas’s Truth in Taxation laws, which aim to make rate increases more transparent.

Even so, your bill can still rise if:

• Your property value increased faster than the average
• You lost an exemption
• You added improvements
• Your home is assessed higher than comparable properties

Why Your Tax Bill Can Rise Even If Rates Fall

Here’s the part that confuses most homeowners:

Sometimes, Texas property tax rates go down, but tax bills still go up.

That happens when property values increase significantly. Even with a slightly lower rate, a much higher taxable value can produce a larger bill.

For example:

• Last year: $300,000 × 2.5% = $7,500
• This year: $350,000 × 2.4% = $8,400

The rate dropped, but the bill increased.

What You Can Control (And What You Can’t)

You cannot directly control the tax rate set by your city or school district, nor appeal it. However, you can challenge whether your property value is accurate and fair.

If your home is assessed higher than similar homes, you may be able to reduce your taxable value through a protest especially using a Uniform & Equal approach.

Key Takeaways for Texas Homeowners

• Texas property tax rates are set locally each year
• Rates are based on budget needs and total taxable value
• The no-new-revenue rate limits automatic revenue increases
• Your tax bill equals value × rate
• Lowering your taxable value is often the most effective way to reduce your bill

Stay Ahead of Rate and Value Changes

While you can’t set the tax rate, you can prepare for how it affects you. Monitoring your value, reviewing exemptions, and preparing strong evidence before protest season can reduce your overall tax burden regardless of where rates move.

AppealSnap provides professional Uniform & Equal evidence for just $75, giving you the data you need to challenge unfair valuations and protect your budget.