Texas Property Taxes Compared to Other States + FAQs

Lana Dolyna, EA, CTC
Lana Dolyna, EA, CTC

Senior Tax Advisor

According to a 2022 study on property taxes by WalletHub, an average American single-family household has a median value of $217,500, and its residents spend about $2,471 on property taxes each year. In comparison, an equivalent average household in Texas would pay about $3,907, or over 58% more. The WalletHub study ranks Texas as the state with the 7th highest property tax rates out of 51 (including D.C.). 

These numbers don’t reveal all the details, and multiple factors can affect the amount of property taxes owed by a Texas resident. Here’s everything you need to know about Texas property tax rates and how they compare to the rest of the country.

How Much Are Property Taxes in Texas?

The Lone Star State’s average property tax rate is approximately 1.80%. In other words, if you own a house in Texas valued by a tax assessor at $350,000, your property tax rate is $6,300 a year. 

According to the Texas Comptroller’s Office website, Texas has no state-level property tax. Only local taxing units (e.g., cities, counties, school districts) collect property taxes. The 1.80% figure is an average of the property tax rates imposed by the taxing units in the state.

How Are Property Taxes in Texas Calculated?

Local governments in Texas calculate property taxes by using the property’s fair market value. Each county has a property appraisal district and a team of tax assessors who evaluate every taxable property’s value. 

Once tax assessors have determined the value of a property, the taxpayer pays a property tax equivalent to a percentage of the property’s fair market value. So, if a property’s value rises, so do the property taxes. 

A property may be within the jurisdiction of one or multiple local taxing entities (e.g., city, college district, hospital district, etc.), each with its own tax rate. A taxpayer’s annual tax rate is the combined total of the taxing units that have jurisdiction over the property’s address. The taxpayer’s annual tax bill details the final value and full breakdown of entities collecting property taxes.

For example, a property located within Dallas, TX, owes property taxes to the City of Dallas and Dallas County. If that property is located within the Dallas Independent School District, the taxpayer also owes additional taxes to the school district on top of the other local tax units.

If a taxpayer disagrees with the value assessed by a local tax appraiser, they may file a complaint with their local jurisdiction’s Appraisal Review Board (ARB). Depending on their individual circumstances, a Texas homeowner may request a reassessment of their property’s value or apply for a property tax relief or exemption.

Texas Property Taxes Compared to Other States

Each property owner’s situation varies depending on the rates levied by local taxing authorities. On average, a homeowner in Texas pays, on average, more property taxes than homeowners living in other states. This fact remains true even when counting states that do not levy personal income taxes on their residents.

According to the WalletHub property tax study, the state’s average residential property tax rate of 1.80% is the 7th highest in the nation. The only states with higher average rates are Wisconsin, Vermont, Connecticut, New Hampshire, Illinois, and New Jersey.

List of States by Effective Property Tax Rates

Below is a list of all 50 states plus the District of Columbia, ranked by effective property tax rates from highest to lowest.

Rank

State

Effective Property Tax Rate

1

New Jersey (NJ)

2.49%

2

Illinois (IL)

2.27%

3

New Hampshire (NH)

2.18%

4

Connecticut (CT)

2.14%

5

Vermont (VT)

1.90%

6

Wisconsin (WI)

1.85%

7

Texas (TX)

1.80%

8

Nebraska (NE)

1.73%

9

New York (NY)

1.72%

10

Rhode Island (RI)

1.63%

11

Pennsylvania (PA)

1.58%

12

Iowa (IA)

1.57%

13

Ohio (OH)

1.56%

14

Michigan (MI)

1.54%

15

Kansas (KS)

1.41%

16

Maine (ME)

1.36%

17

South Dakota (SD)

1.31%

18

Massachusetts (MA)

1.23%

19

Alaska (AK)

1.19%

20

Minnesota (MN)

1.12%

21

Maryland (MD)

1.09%

22

Washington (WA)

0.98%

22

North Dakota (ND)

0.98%

24

Oregon (OR)

0.97%

24

Missouri (MO)

0.97%

26

Georgia (GA)

0.92%

27

Oklahoma (OK)

0.90%

28

Florida (FL)

0.89%

29

Kentucky (KY)

0.86%

30

Indiana (IN)

0.85%

31

Montana (MT)

0.84%

31

North Carolina (NC)

0.84%

33

Virginia (VA)

0.82%

34

Mississippi (MS)

0.81%

35

New Mexico (NM)

0.80%

36

California (CA)

0.76%

37

Tennessee (TN)

0.71%

38

Idaho (ID)

0.69%

39

Arizona (AZ)

0.66%

40

Utah (UT)

0.63%

41

Arkansas (AR)

0.62%

42

Wyoming (WY)

0.61%

43

Nevada (NV)

0.60%

44

West Virginia (WV)

0.58%

45

Delaware (DE)

0.57%

45

South Carolina (SC)

0.57%

47

District of Columbia (DC)

0.56%

48

Louisiana (LA)

0.55%

49

Colorado (CO)

0.51%

50

Alabama (AL)

0.41%

51

Hawaii (HI)

0.28%

Texas vs. California

Despite its ranking as the 3rd most expensive state to live in, California’s effective property tax rate of 0.76% is lower than both Texas’ property tax rate of 1.80% and the national average property tax rate of 1.07%. 

In California, property taxes are calculated ad valorem, based on your home’s value. California’s Proposition 13 states that to calculate your property tax, multiply the state tax rate by the tax assessed value of your property. Prop 13 limits property taxes to 1% of your home’s value and does not allow tax assessments to rise by more than 2% each year. 

As in Texas, the real property tax rate will depend on your county and the price of your home. This is why if you live in a home with a high estimated property value, you may end up paying more property taxes overall than those with lower-value homes, despite having lower tax rates in your county. 

For example, San Francisco’s residents pay a median annual real property tax of $6,019 and an average effective real property tax rate of 0.65%. Those in Sierra county pay a lesser median annual real property tax of $1,496 but at a higher effective tax rate of 0.95%.

California Total Tax Burden

Your total tax burden is the sum of your property tax, individual income tax, and total sales & excise tax. A recent WalletHub study ranked each state from highest total tax burden (12.75% in New York) to lowest (5.06% in Alaska). 

Texas ranks 32nd on the list, with a total tax burden of 8.22%. Since Texas has no individual income tax, the tax burden is split between the property tax burden (3.97%) and the sales tax burden (4.25%). 

California ranks 9th, with a higher total tax burden of 9.72%. California does have an income tax, so the total tax burden is split three ways, between property tax (2.76%), income tax (3.80%), and sales tax (3.16%). This is why you pay a lower property tax rate in California than in Texas but still face a higher tax burden overall.

Texas vs. Florida

Florida’s effective real estate tax of 0.89% is lower than Texas’ rate and the national average rate. Like Texas, Florida does not have an individual income tax.

On average, Floridians pay $1,914 in annual taxes on a home priced at the state’s median value of $215,300. Texans pay an average of $3,099 in annual taxes on a home priced at the state’s median value, $172,500. The average home price is higher in Florida than in Texas, but since Florida’s effective property tax is so low, you end up paying lower property taxes.

The amount Florida homeowners pay in real property tax varies between counties. For example, if you live in St. Johns County, one of the more affluent counties in Florida, you pay an average effective property tax rate of 0.88% and $1,885 on average in property tax payments. If you live in the landlocked county of DeSoto, a lower income area, you only pay an average of $1,014 in property taxes despite a higher effective rate of 1.21%.

Florida Total Tax Burden 

Floridians face one of the lowest total tax burdens in the country (6.64%), with only 5 states boasting lower tax burdens. Florida does not have an individual income tax, so your total tax burden only includes the property tax burden (2.77%) and sales tax burden (3.87%). Despite not having an individual income tax, Texas’ total tax burden is much higher (8.22%) than Florida’s. Both its property tax burden (3.97%) and sales tax burden (4.25%) are higher than rates in Florida.

Texas vs. New York

Although New Yorkers face a higher-than-average effective property tax rate of 1.72%, the rate is still lower than Texas’ property tax rate of 1.80%. Unlike Texas, New York has no personal property tax. Instead of taxing items like vehicles (including mobile homes), New York only taxes real estate property.

Like Texas, Florida, and California, New York is home to a diverse range of inhabitants with differing incomes, which is considered when each county determines its property taxes. For example, affluent Westchester County collects the highest property tax, levying $9,003 on average in yearly property taxes, while St. Lawrence County only collects $1,674 on average in yearly property taxes.

New York Total Tax Burden

New Yorkers face the highest overall tax burden, paying 4.43% in property taxes, 4.90% in income taxes, and 3.42% in sales taxes, for a total tax burden of 12.75%. Texans face lower tax burdens than New Yorkers in every area except for sales tax; Texans face a marginally higher sales tax burden of 4.25% because they do not pay income tax.

Which Texas Counties Have The Lowest Property Taxes?

Texas is divided into 254 counties, more than any other U.S. state. The population in each county ranges from just over 100 (e.g., Loving County, near New Mexico) to over 4 million (e.g., Harris County, home of Houston, TX).

Each county imposes different property tax rates on its residents. Here are the top 3 counties with the lowest property taxes.

1. Terrell County

Terrell County is located in Western Texas, bordering Mexico to the south. Its county seat is Sanderson. It is home to just 760 inhabitants, making it the 7th least populous in the Lone Star State.

According to the Terrell County Appraisal District, the combined property tax rates in Terrell County are 0.8%, including 0.8% for maintenance and operations (M&O) and 0% for interest and sinking (I&S).

A homeowner with a property worth $350,000 in Terrell County would need to pay $2,800 of property taxes yearly.

2. Ward County

Ward County is located in Western Texas. Its county seat is Monahans, and it has a population of 11,644.

According to the Ward County Appraisal District, Ward County imposes a combined tax rate of 0.69%. Additional local tax units impose property taxes, including the cities of Monahans (0.35%), Grandfalls (approx. 0.22%), Wickett (approx. 0.16%), and the Ward County Water Improvement District #2 (approx. 0.01%).

A homeowner with a property worth $350,000 in Monahans, TX, pays a combined total of 1.04% in property taxes, or about $3,640.

3. Zapata County

Zapata County is a Southern Texas county located just 200 miles from San Antonio and bordering Mexico to the south and west. The county seat is Zapata, and the total population is 13,889.

According to the Zapata County Appraisal District, the county’s combined property tax rate is approximately 1.55%, including 0.639% from the county, 0.215% from the CI-Bond entity, and approx. 0.7% on research, development, and other special taxes.

A homeowner with a property worth $350,000 in Zapata County would need to pay $5,425 of property taxes yearly.

Which Other States Pay No Income Tax?

Besides Texas, six other states levy no income taxes:

 

Two states are sometimes mislabeled as no-income tax states:

How Having No Income Tax Impacts Your Earnings

If you live in a state that doesn’t levy personal income taxes, it means that your state government does not require you to pay taxes from your wages, pension, retirement plan (e.g., 401(k) plan or IRA), or Social Security income.

Example: An individual with a yearly salary of $80,000 living in a state imposing a tax rate of 5.25% for their income bracket must pay a yearly income tax rate of $4,200, reducing their yearly earnings to $75,800 (before other taxes).

What Other States Have Property Tax Rates Similar to Texas?

The following states have similar average effective property tax rates to Texas. In these states, as in Texas, local governments levy property taxes rather than the state itself.

The effective property tax rates listed represent a homeowner’s average property tax in a given state. Since local government rates vary, your exact individual tax rate will depend on your specific location within your state.

Vermont

Vermont has an average effective property tax rate of 1.90%, the 5th highest rate in the nation. The median home value is $227,700, higher than Texas’ median home value of $172,500.

As well as local property taxes, Vermont also levies an additional property tax that supports local schools called an education tax. This statewide education tax is one of the reasons for Vermont’s high property tax rate. 

Vermont also requires its municipalities to conduct reappraisals on homes with assessed values below 80% of their market value. Otherwise, the appraisal process varies from one town to the next.

Nebraska

With an average effective property tax rate of 1.73%, Nebraska has the next highest rates after Texas and the 8th highest rates overall. Three counties (Douglas County, Sarpy County, Scotts Bluff) have property tax rates of over 2%

As with Texas, the state of Nebraska is not allowed to levy property taxes, therefore all taxes are collected at the local level. Since it is up to local tax authorities like school districts and city governments to levy taxes, rates can vary between neighborhoods; the local tax authority levies taxes and applies rates based on their specific revenue needs.

Connecticut

Connecticut has an average effective property tax rate of 2.14%, higher than Texas, Vermont, and Nebraska, twice the average national rate (1.07%) and 4th highest nationwide. Connecticut’s median home value of $275,400 is far higher than the $172,500 median home value of Texas. 

In Connecticut, counties are not responsible for levying property taxes; it falls to the cities and towns to set rates and collect taxes. To do this, local municipalities assign assessors to determine the fair market value of properties at least once every five years. The property’s assessed value is equal to 70% of its market value, and the homeowner pays taxes on this lower amount.

Why Are Property Taxes So High in Texas?

Texans face one of the highest property taxes in the nation and aren’t happy about it. A recent poll by the University of Texas found that 54% of Texans believe they are paying too much in property taxes, with 26% saying what they paid seems right, and only 5% saying they pay too little.

No State Income Tax

Most states get their sources of revenue through the trifecta of income tax, property tax, and sales tax. States use these funds for education, building and repairing infrastructure, providing health coverage to low-income families, and other services essential to building healthy communities.

Seven states, including Texas, do not levy a state income tax. To make up for this loss of revenue, these states often levy more or higher property taxes. Therefore, because Texans don’t pay personal state income taxes, they end up paying higher property taxes.  

Despite high property taxes, Texans face the 19th lowest total tax burden (8.19%), including income from sales and property taxes.

High Property Values

Although some states are beginning to see housing prices level out as we begin to put Covid-19 behind us, the cost of buying a home in Texas remains higher than it was before the pandemic. These high home prices are driven by many factors, including Texas’ growing economy, explosive population growth, cost of land, government ordinances controlling land use and construction, and shortage of skilled construction workers.

In Texas, property taxes are ad valorem taxes, which means they are based on the appraised value of your property, not the market price. Those living in high-cost homes tend to have higher appraised property values, and will therefore pay higher property taxes.

Texans are required to have their homes appraised each year. Therefore, the more your home increases in value over the years, the higher the property taxes you will owe. 

Let’s say you live in Dallas County where the average property tax rate is about 2%. If your home is appraised at $300,000, you will pay about $6,000 in property taxes. If the next year, your home is appraised at $350,000, you will pay $7000 on average in annual property taxes.

Local Authorities Set Taxes

In the Lone Star State, local government entities are responsible for determining your property tax, not the state. Your local property taxes help pay the salaries of firefighters and police, finance public schools, libraries, playgrounds, roads, and streets and pay for emergency medical services.

Though you may like seeing your tax dollars at work in your community, local government property taxes can be poorly administered, regressive, and vary by geographical region and property type. You may end up paying higher rates than you would for a similar home in the next neighborhood over just by virtue of your specific local government’s priorities.

Texas cannot regulate or intervene in property taxation, even to increase funding for public education. It is up to local authorities to determine how much of your taxpayer money goes toward each service, and you may end up paying for services you don’t use or don’t believe are necessary.

Additionally, since the local government relies on property taxes as a source of revenue, Texans face stiff penalties for failing to pay these taxes on time. 

Which States Are the Worst for Property Taxes?

According to the WalletHub property tax study, the three states with the highest overall property tax rates are New Hampshire (ranks 49th), Illinois (50th), and New Jersey (51st). 

Here are the details regarding each state’s tax rates and total tax burden, the ratio of an individual’s total personal income that must go toward taxes.

New Jersey

The Garden state has the highest overall property tax rates, at 2.49%. The Garden state is also home to the 7th highest median home value, at $335,000, contributing to the state’s high overall property values.

Example: An individual living in a New Jersey home valued at $350,000 must pay $8,715 in property taxes annually.

New Jersey Total Tax Burden

According to a separate WalletHub study regarding tax burden, New Jersey ranks as the state with the 6th highest total tax burden, at 10.11%. 4.98% of the total tax burden is property tax burden, 2.54% is individual income tax burden, and 2.59% is sales and excise tax burden.

Illinois

Although the median value of a home in Illinois is just $194,500 ($22,000 more than Texas), the Prairie state has the 2nd-highest property tax rates in the nation, at 2.27%.

Example: An individual living in an Illinois property valued at $350,000 must pay $7,945 in property taxes yearly.

Illinois Total Tax Burden

According to the WalletHub tax burden study, the total tax burden in Illinois is 9.70%, making it the 10th highest in the country. 3.98% of the total is property tax burden, whereas 2.22% is individual income tax burden, and 3.50% is sales and excise tax burden.

New Hampshire

Ranked just behind Illinois, the Granite state’s property tax rates are the 3rd-highest in the U.S., at 2.18%. The state also features a median property value of $261,700, or over 51% more than that in Texas.

Example: An individual living in a New Hampshire property valued at $350,000 must pay $7,630 in property taxes each year.

New Hampshire Total Tax Burden

Despite having the 3rd-highest property tax rates nationwide, the WalletHub tax burden study revealed that the total tax burden in New Hampshire is the 5th lowest in the country (rank 46), at just 6.41%. This figure includes 5.11% in property tax burden, 0.14% in personal income tax burden, and 1.16% in sales and excise tax burden.

How Bad Are the Overall Taxes in Texas?

Although the average property tax rates in Texas rank in the country’s top 10 highest, you may be wondering about the other elements of the state’s tax system and how each one compares to other states.

According to statistics compiled by the independent nonprofit Tax Foundation, Texas levies the following taxes:

State Sales Tax

The Lone Star State’s state-level sales tax rate is 6.25%, ranking 13th out of 51 in the nation. This rate does not include local sales taxes, which average at 1.95%.

Franchise Tax

Texas is one of the few states in the country not to impose corporate income taxes on resident businesses. It does levy a franchise tax on businesses earning over $1.23 million per year. The rate is 0.375% for retail and wholesale businesses and 0.75% for other sectors.

Gasoline Tax

Texas has one of the lowest state gasoline tax rates in the United States, at just $0.20 per gallon (44th highest out of 51)

Cigarette Tax

Texas imposes a cigarette tax of $1.41 per standard pack of 20, ranking as the 30th highest out of 51.

Who Benefits by Having No Income Tax and High Property Taxes?

Living in a state with no income taxes offers both benefits and drawbacks to individuals and businesses. While a lack of income tax is beneficial to all households from a financial standpoint, the more a homeowner earns, the more money they can save by living in a state with no income taxes.

States with no income tax may either compensate with increased rates on other tax types or spend less on public infrastructure. In the former case, residents may still see decreased earnings, as money not spent on income tax is spent through other channels (e.g., high property taxes, high sales, and excise taxes).

If a no-income-tax state chooses to spend less on public infrastructure, then residents may have access to fewer public services and benefits as a consequence. For instance, income taxes typically fund the state-managed parts of the road network, education infrastructure (e.g., high schools, libraries), local law enforcement agencies, and other public services.

Examples:

  • A single person earning $1 million a year in Wyoming must pay an effective tax rate of 32.94% ($329,428) to the federal government but $0 to the state, resulting in an after-tax income of $670,572.
  • A single person earning $1 million a year in California pays the same effective federal tax rate of 32.94% ($329,428) but also an effective federal state tax rate of 13.24% ($132,372), resulting in an after-tax income of $538,200.

FAQs

Here are the answers to some common questions related to property taxes in Texas.

When comparing the property tax rates between Texas and California, Texas has the higher property taxes of the two. The average effective property tax rate in Texas is 1.80%, compared to 0.76% in California.

The state with the lowest property tax rates nationwide is Hawaii, at just 0.28%. A Hawaii homeowner with a property valued at $350,000 pays $980 in property taxes annually.

Unfortunately, there are no states without property taxes. All 50 states and the District of Columbia levy property taxes of some type on individuals and businesses.

The Texas counties with the lowest property taxes are Terrell County, Ward County, and Zapata County.

Under Texas Tax Code, Section 33.06, taxpayers 65 years and older can defer their property taxes until their estate is settled following their death. 

The City of Stafford is the only city in Texas to abolish city property taxes, though it levies an additional 2% on sales tax.

Including small and midsize cities, Pearland, TX has the highest effective property tax rate, at 2.30%. Of the larger cities, El Paso, TX has the highest effective property tax rate (2.13%), followed by Fort Worth (1.86%) and San Antonio (1.85%).