Texas has no state income tax, so local services are funded largely through property taxes. For homebuyers around Houston, the tax bill can be as important as the price — here's what to know before you make an offer.
Your tax rate is a stack of local rates
Your bill combines several taxing units: the county, the school district, often a city, and sometimes a MUD (Municipal Utility District), emergency services district, community college district or township. Add them together for the total rate. Around Houston, total rates commonly land in the range of 2–3% of a home's appraised value per year — and two similar homes a few miles apart can have very different bills.
What's a MUD?
Many suburban neighborhoods sit inside a Municipal Utility District, which builds water, sewer and drainage for new development and repays it through its own tax rate. Texas requires sellers to give buyers a MUD notice before signing a contract, and I'll get you the rate up front so there are no surprises.
The homestead exemption
- If the home is your primary residence, file for a homestead exemption with your county appraisal district (for example HCAD in Harris County, MCAD in Montgomery County or FBCAD in Fort Bend County).
- Starting with the 2025 tax year, the school-tax homestead exemption is $140,000 off your home's value.
- Homeowners who are 65 or older or disabled receive an additional $60,000 — $200,000 in total for school taxes.
- Once you have a homestead, your home's taxable value generally can't go up more than 10% per year.
The new-construction surprise
If you buy a brand-new home, your first tax bill may be based on the land only, because the house wasn't finished on January 1. The next year's bill reflects the full value — and your mortgage escrow payment can rise. Plan for it from day one.
You can protest your appraisal
Each spring, appraisal districts mail notices of appraised value. If you think your value is too high, you can file a protest — generally by May 15 or 30 days after your notice was mailed, whichever is later. Many Houston-area homeowners protest every year.