Understanding Houston Property Taxes
If you're buying a home in Houston, property taxes will likely be your biggest ongoing cost outside of your mortgage. They're also one of the most misunderstood parts of Texas homeownership. This guide explains exactly how they work — in plain English.
Quick Takeaway
Texas has no state income tax — but property taxes are among the highest in the nation, averaging 1.60–2.50% of a home's assessed value per year. On a $350,000 home, that's roughly $5,600–$8,750 annually.
How Are Property Taxes Calculated?
Your property tax bill is the result of two numbers multiplied together:
Assessed Value × Tax Rate = Annual Tax Bill
Assessed valueis set by your county appraisal district (for most of Greater Houston, that's HCAD — the Harris County Appraisal District). They estimate your home's market value as of January 1st each year.
Tax rate is the combined rate from all the taxing entities that apply to your property — your county, city, school district, hospital district, and any special districts (like a MUD). Rates are expressed per $100 of assessed value.
Who Sets Your Tax Rate?
Multiple taxing entities each set their own rate, and they all stack on top of each other. A typical Houston-area homeowner pays taxes to 4–6 different entities at once:
Rates are approximate and change annually. Always verify current rates with HCAD or your agent.
Key Exemptions That Reduce Your Bill
Texas law offers several exemptions that lower your taxable value. The most important one for homeowners is the Homestead Exemption.
Homestead Exemption
Reduces your home's taxable value by $100,000 for school district taxes (as of 2023 legislation). Also caps how much your assessed value can increase each year at 10%. You must own and occupy the home as your primary residence on January 1st.
Over-65 / Disability Exemption
Homeowners 65 or older (or those with a qualifying disability) receive an additional exemption and a freeze on school district taxes — your school tax bill can never go up after you qualify.
Veterans Exemption
Disabled veterans may qualify for partial or full property tax exemptions depending on their disability rating.
When Are Property Taxes Due?
Tax statements are mailed out in October and are due by January 31st of the following year. Pay by that date to avoid penalties.
Oct–Nov
Tax statements mailed
Jan 31
Payment due — no penalty
Feb 1+
6% penalty + 1% monthly interest begins
Most homeowners with a mortgage don't pay this directly — your lender collects 1/12th of the estimated annual bill in your monthly escrow payment and pays the tax authority on your behalf.
How to Protest Your Assessment
Every year, HCAD mails a Notice of Appraised Value. If you believe your home is assessed above its fair market value, you have the right to protest — and it's easier than most people think.
Review your notice when it arrives (typically April–May)
File a protest online at hcad.org by May 15 (or 30 days after the notice date)
Gather evidence: recent sales of comparable homes, photos of condition issues, your purchase price if you bought recently
Attend an informal hearing with an HCAD appraiser — most protests are resolved here
If unsatisfied, request a formal Appraisal Review Board (ARB) hearing
Pro tip:If you purchased your home within the last year, that sale price is strong evidence of market value. HCAD cannot legally assess your home above what you paid if the sale was arm's length.
What Buyers Should Do Before Closing
Before you make an offer on any home, ask your agent to pull the current assessed value and total tax rate for that specific property. The seller's current bill may be misleadingly low if they have a homestead exemption you won't inherit.
- Look up the property on hcad.org before making an offer
- Ask if the current owner has exemptions you won't have (over-65 freeze is a big one)
- Factor the full tax rate into your monthly payment estimate
- File your own Homestead Exemption as soon as you close
Written by
Christopher Nolan
REALTOR® · Houston, TX
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