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Texas Local Property Tax - The Basics
Path of a Property Tax Dollar
1. You pay your property taxes to the local tax collector.
2. The tax collector distributes funds to schools, cities and other local governments.
3. Local governments spend funds on: Schools, Roads, Hospitals, Fire Departments, & Other Programs
The Texas local property tax is just that — a local tax, assessed locally, collected locally and used locally.
More than 3,700 local governments in Texas — school districts, cities, counties and various special districts collect and spend these taxes.
Several types of local governments may tax your property. Texas counties and local school districts tax all nonexempt property within their jurisdictions. You also may pay property taxes to a city and to special districts such as hospital, junior college or water districts.
The governing body of each of these local governments determines the amount of property taxes it wants to raise and sets its own tax rate. Most, but not all, local governments other than counties contract with their county’s tax assessor-collector to collect the tax on their behalf.
Where Does the Money Go?
The local property tax is the largest single funding source for community services. State government receives no benefit from these local taxes. Your local property taxes help to pay for your public schools, city streets, county roads, police departments, fire protection and many other vital programs.
What is the State’s Role?
Texas has no state property tax. The Legislature has authorized local governments to collect the tax. The state does not set the tax rates, collect the taxes or settle disputes between you and your local governments.
The Comptroller’s role in property taxation is primarily limited to advisory and monitoring services provided by the Comptroller’s Property Tax Division (PTD).
Most importantly, PTD conducts an annual Property Value Study for each school district in the state, to measure whether their appraisal districts are appraising property at market value and thus ensure appropriate school funding. The Comptroller’s study, however, does not directly affect local values or tax collections.
Who Does What?
Your local property tax system has several main components.
Property Tax Process
|County Appraisal District (CAD)
||Appraises the value of your property each year.
|Appraisal Review Board
||A board of local citizens, appointed by the county appraisal district’s board of directors, that settles disagreements between you and the appraisal district about your property’s taxability and value.
|Local taxing units
||Set budgets and property tax rates.
|County Tax Assessor-Collector
||In many counties, local governments contract with this official to collect all property taxes due in that county. The assessor-collector then transfers the appropriate amounts to each government. Although some taxing units may contract with an appraisal district to collect their taxes, the appraisal district does not levy a property tax.
When Do They Do It?
The property tax process for each tax year includes a series of steps, as follows:
Brief Property Tax Calendar
||CADs are required to appraise property at its value on this date. A lien attaches to each taxable property to ensure property tax payment.
|January 1 - April 30
||CAD completes appraisals and processes applications for exemptions.
||Taxes due to local taxing units (or county tax assessor-collector, if acting on their behalf).
||Local taxing units begin charging penalty and interest for unpaid tax bills.
|April - May
||Appraisal districts send notices of appraised value.
||Appraisal review board begins hearing protests from property owners.
||Local taxing units may impose additional penalties for legal costs related to collecting unpaid taxes.
|August - September
||Local taxing units adopt tax rates.
||Local taxing units (or county tax assessor-collector, acting on their behalf) send tax bills to property owners.
What Does the Texas Constitution Say?
The Texas Constitution sets out five basic rules for property taxes in our state:
1. Taxation must be equal and uniform. No single property or type of property should pay more than its fair share. The property taxes you pay are based on the value of property you own. If, for instance, your property is worth half as much as the property owned by your neighbor (after any exemptions that apply), your tax bill should be one-half of your neighbor’s. This means that uniform appraisal is very important.
2. Generally, all property must be taxed based on its current market value. That’s the price it would sell for when both buyer and seller seek the best price and neither is under pressure to buy or sell. The Texas Constitution provides certain exceptions to this rule, such as the use of “productivity values” for agricultural and timberland. This means that the land is taxed based on the value of what it produces, such as crops and livestock, rather than its sale value. This lowers the tax bill for such land.
3. Each property in a county must have a single appraised value. This means that the various local governments to which you pay property taxes cannot assign different values to your property; all must use the same value. This is guaranteed by the use of county appraisal districts.
4. All property is taxable unless federal or state law exempts it from the tax. These exemptions may exclude all or part of your property’s value from taxation.
5. Property owners have a right to reasonable notice of increases in their appraised property value.