Understanding the Austin, TX Property Tax System for Home Buyers

June 30, 2025

Austin is a vibrant city, attracting home buyers with its booming tech scene, rich culture, and scenic hill country landscapes. But one crucial factor buyers must understand before purchasing a home here is the property tax system. Texas does not have a state income tax, which means municipalities rely heavily on property taxes to fund public services. As a result, property taxes in Austin—and across Texas—tend to be higher than the national average.

Understanding how these taxes work can help you estimate your long-term costs and avoid unexpected surprises. Whether buying your first home or relocating to Austin, a clear picture of the property tax system is essential.

The Basics of Property Taxes in Austin

At its core, the Texas property tax system is ad valorem, which means taxes are based on the value of your property. Each year, county appraisal districts (CADs) determine the market value of your property, which is then used to calculate your tax bill.

In Austin, this job falls to the Travis Central Appraisal District (TCAD). TCAD assesses every property annually and assigns a market value based on recent comparable sales, improvements, lot size, and more.

Once TCAD has appraised your home, local taxing units—such as school districts, the city of Austin, Travis County, community colleges, and utility districts—each apply their tax rate to that appraised value.

How Property Tax Is Calculated

To calculate your estimated property tax bill in Austin:

Appraised Value (as determined by TCAD)
Minus any exemptions you may qualify for (more on this shortly)
Multiplied by the combined tax rate for your jurisdiction

For example:

Appraised home value: $500,000
Homestead exemption: $100,000
Taxable value: $400,000
Combined local tax rate: ~2.1%
Annual property tax: $400,000 x 0.021 = $8,400

Please note: Tax rates vary by location within Austin, depending on which city and school districts serve your property.

Understanding Exemptions

Fortunately, Texas offers several property tax exemptions that can lower your taxable home value and save you money.

Homestead Exemption: The most common exemption reduces the taxable value of your primary residence. As of 2023, the exemption for school districts is $100,000. Many cities and counties offer additional homestead exemptions.
Over-65 or Disabled Exemption: Seniors and disabled homeowners may qualify for additional exemptions, further lowering their tax liability.
Disabled Veteran Exemption: Veterans with service-connected disabilities are eligible for varying levels of exemptions based on their disability rating, up to a full exemption in some cases.

To claim these, you must file with the appraisal district and provide appropriate documentation.

When Are Property Taxes Due?

Texas property taxes are billed annually. Here’s the typical timeline:

January 1 – Appraisal date (property values determined as of this date)
April-May – Notices of appraised value mailed
May 15 – Deadline to file protests if you disagree with your appraisal
October – Final tax rates are set
October–November – Tax bills mailed
January 31 (following year) – Deadline to pay taxes without penalty

Failure to pay by January 31 results in penalties and interest, starting at 7% in February and increasing monthly.

Protesting Your Property Appraisal

If you believe your property’s appraised value is too high, you have the right to protest it. This is a common practice in Texas and can significantly lower your tax bill if successful.

To protest:

File a Notice of Protest with TCAD by May 15 or within 30 days of receiving your appraisal
Present evidence such as recent comparable sales, photos of the home’s condition, or a private appraisal
Attend a hearing or settle informally with TCAD staff

While many homeowners do this themselves, working with a real estate professional or tax consultant can improve your odds of success.

How Property Taxes Affect Your Mortgage

Most lenders collect property taxes as part of your monthly mortgage payment and hold them in an escrow account. This ensures your taxes are paid on time, but it also means your monthly payment can change annually based on your new tax bill.

If your appraisal increases or tax rates change, your mortgage payments may rise—even if you have a fixed interest rate. It’s vital to budget accordingly and monitor your escrow statements closely.

Considerations for New Construction and Investors

New Construction Homes: If you're buying a brand-new home, be aware that the initial tax estimate may only reflect the land value. Once the structure is completed, expect the appraised value—and your tax bill—to jump significantly the following year.
Investment Properties: Investors do not qualify for homestead exemptions. This means rental properties are taxed on their full appraised value, making it even more important to factor in property taxes when calculating ROI.

How an Expert Can Help

Navigating Austin’s complex property tax system can feel overwhelming—especially for first-time buyers or those relocating from states with vastly different rules. That’s why it’s crucial to work with a local expert who understands not just the real estate market but the nuances of local taxation.

Work with Darsh Parikh – Your Austin Property Expert

If you're buying a home in Austin, you don't have to go it alone. Darsh Parikh, a trusted Austin real estate agent, can guide you through the home buying process, including:

Explaining how property taxes will affect your overall cost of ownership
Helping you evaluate neighborhood-specific tax rates
Assisting with resources for homestead exemptions or protests
Navigating new construction purchases and tax implications

Darsh has helped countless clients find their dream homes in Austin while maximizing financial efficiency and avoiding tax-related surprises.

Ready to take the next step? Visit austinrealestatedarsh.com to connect with Darsh today and gain a knowledgeable partner in your homeownership journey.

By understanding Austin’s property tax system and working with a seasoned expert, you can make more informed decisions and feel confident in your investment. Whether you're looking for your first home or your next, knowing what to expect—and who to trust—can make all the difference.