High Texas Property Taxes. Is There a Solution?

Texas is booming, economically speaking. A friendly business environment has led to a growing tech sector in Austin, specifically. However, not all residents are feeling optimistic. Texas property taxes are among the highest in the nation.

As a state with no income tax, Texas has often been seen as a tax paradise, similar to Florida. However, as is the case with many such states; no state income tax isn’t always a better situation.

At 1.86%, Texas property taxes are among the highest in the country, according to a study by WalletHub. In fact, Texas ranks 46th out of 51 (Washington DC included) in terms of the highest effective property tax rates.

New Jersey ranks worst overall; followed by Illinois, New Hampshire, Connecticut, and Wisconsin. For reference, states where you might assume property taxes would be high include:

  • New York (41st, 1.65%)
  • California (17th, 0.79%)

What Gives?

Texas property taxes reflect their lack of state income tax. When states operate this way, the revenue that is lost is made up for elsewhere. A state without income tax can often be found to have higher state sales tax, excise tax, or in the case of Texas: property taxes.

The problem with Texas property taxes is that they are largely funding the state’s public education system.

“As the state’s share of public education funding has declined, the burden on local property taxes and recapture payments has grown, eliminating any opportunity for local property tax rates to be reduced…..About 54 percent of all property taxes paid in Texas are collected by school districts. ” -” Select Committee on Economic Competitiveness

Grumbling home and business owners argue that Texas property taxes are restrictive. That they result in limiting a business’ ability to expand, hire, or innovate. Homeowners worry that their tax dollars are leaving their community and going elsewhere. As a result, they wind up financing districts they don’t live in or near.

“That money leaving the community is really tough. It puts a burden on the school district. It puts a burden on the families here to pay for the low-income schools in part of the state they never even go to.” – Wayne Gerami, Austin Habitat for Humanities

Relief in Sight?

The Texas School Finance Commission is hearing testimony from individuals and business owners. They have until the end of the year to file a report with recommendations to the governor.

However, relief does not seem likely.

“Since 1995, the state has purchased two across-the-board rate reductions in the school tax, quintupled the size of the homestead exemption and still, tax levies and dissatisfaction are rising..History would suggest that periodic successes are feasible, but that a lasting solution that is satisfactory to all may be hard to come up with.” – Former Chief Revenue Estimator James Le Bas

As a result, it may be some time before Texas sees a reduction or modification to its property tax rates.

Texas Property Taxes Got You Down?

If Texas property taxes have you considering a change; Download City vs City. 

Using data curated at the zip-code level, City vs City determines the true cost of living in a given city. Then, we compare those costs against one another.

As a result, you’ll see a side by side comparison of the cost of living in your current city and one you’re considering moving to. How much will it cost in your new city to maintain your current standard of living? Will costs go up or down?

Download the City vs City app today and start comparing!