One of the most common surprises for buyers relocating to Austin — especially from California, New York, or Washington — is Texas property taxes.
The pitch is familiar: Texas has no state income tax. That is true. What is less often explained upfront is that Texas makes up for it largely through property taxes, which rank among the highest effective rates in the country.
Understanding property taxes before you buy in Austin is not optional. It is part of calculating the real cost of ownership.
How Texas Property Taxes Work
In Texas, property taxes are assessed and collected at the local level — not by the state. Your annual tax bill is determined by two things: the assessed value of your property (set by the county appraisal district) and the combined tax rate applied by all the taxing entities that apply to your address.
In Travis County, those entities typically include the county itself, the city of Austin or your municipality, your school district, and any special districts such as hospital or community college districts.
Combined, the effective property tax rate for most Austin homeowners falls between 1.8% and 2.4% of assessed value annually.
What That Looks Like in Practice
At a 2.1% effective rate, here is what buyers can expect:
- $600,000 home → approximately $12,600/year in property taxes ($1,050/month)
- $900,000 home → approximately $18,900/year ($1,575/month)
- $1,200,000 home → approximately $25,200/year ($2,100/month)
- $1,500,000 home → approximately $31,500/year ($2,625/month)
For buyers accustomed to California's effective rate of roughly 1.1% (capped by Proposition 13), the difference is significant. A $1,200,000 home in Austin generates nearly double the annual property tax burden of a comparable California property.
The Homestead Exemption — and Why You Should File It Immediately
Texas law provides a homestead exemption for primary residences that reduces the taxable value of your home. As of 2025, the general homestead exemption removes $100,000 from your property's assessed value for school district taxation purposes — meaningfully reducing your tax bill.
Additional exemptions apply for homeowners who are 65 or older, disabled veterans, or survivors of first responders. These exemptions provide significant additional relief and, for seniors, can include a school tax freeze that caps the amount owed regardless of future appraisal increases.
You must file for the homestead exemption with your county appraisal district. It applies only to your primary residence, not investment properties or vacation homes. Filing must occur before April 30 of the tax year.
How Travis County Appraises Property
The Travis Central Appraisal District (TCAD) reassesses property values annually. In a rising market, assessed values can increase significantly year over year — and in Austin, many homeowners have seen assessments jump 20–30% in a single cycle during peak years.
State law caps the increase in taxable value for homestead properties at 10% per year, regardless of how much the appraised market value rises. This is a meaningful protection for established homeowners but does not apply in the first year of ownership.
Protesting Your Appraisal
Every year, TCAD sends notices of appraised value. Every homeowner has the right to protest that value if they believe it is too high — and in Austin, a meaningful percentage of homeowners do exactly that.
A successful protest can reduce your assessed value, directly lowering your tax bill. The process involves filing a protest with TCAD, gathering comparable sales data, and presenting your case either informally or before an appraisal review board.
Working with an Austin real estate advisor who understands local comps and appraisal patterns can help you evaluate whether a protest is warranted each year.
What Buyers Should Do Before Closing
Before you close on an Austin property, do three things:
- Ask for the current annual tax bill (not just the rate) on the specific property
- Calculate your post-purchase tax burden using current assessed value, not the purchase price
- Understand which taxing entities apply to the address and what their combined rate is
Your lender will typically include an estimated property tax figure in your monthly payment calculation. Verify that estimate is accurate for the specific address — not an Austin average.
The Bottom Line
Texas property taxes are the trade-off for no state income tax. For high earners relocating from income-tax states, the math often still works in Texas's favor. But buyers who do not account for property taxes accurately before buying often find their monthly carrying costs higher than expected.
Understanding the real cost of ownership — including taxes, insurance, and HOA fees if applicable — is how thoughtful buyers make decisions they do not regret.
