The Average Cost Of Property Taxes In Texas Might Catch You Off Guard

Ask Texans what they love about the Lone Star State, and chances are their response involves barbecue and low taxes — especially no taxes on income. However, according to the Tax Foundation, Texas has one of the highest effective property tax rates in the country. According to the study, in 2023, the state had an average effective rate of 1.36% — the seventh highest in the country.

An effective property tax rate is the percent of a property's value that the homeowner pays in taxes each year. For example, if your home is valued at $600,000 and you pay $6,000 in property taxes, your effective property tax rate is 1%. Texas' high property taxes are likely a result of the state's lack of income and corporate taxes. State-imposed taxes across the country are used to fund local government and essential services. States that have high property taxes often have them in lieu of other types of taxes. This is also why Texas has a moderately high average sales tax rate of 8.2% when looking at the average state and local sales tax rate.

While Texas averaged a 1.36% property tax rate, it was not that same rate throughout the state. In fact, taking a granular look at Texas, the areas with the highest tax rates were as unexpected as Texas' generally high tax rate. Per the Tax Foundation's analysis, El Paso, McMullen, and Fort Bend Counties had the state's highest effective tax rates at 2.09%, 1.99%, and 1.99%, respectively. These areas are not the most populous in the state and generally have lower property values. Often, local governments set higher tax rates in such areas to generate revenue needed to fund their services.

Despite having the highest tax rates, El Paso, McMullen, and Fort Bend County did not pay the most in taxes. According to the analysis, in 2023, Travis, Collin, and Williamson Counties had the highest median property taxes paid with bills of $7,487, $7,432, and $7,079, respectively. Despite having a lower tax rate than El Paso, McMullen, and Fort Bend Counties, they topped the charts because they have some of the highest property values in the state. Even if you qualify for tax breaks you should know about if you own a home, such as rebates for mortgage interest, the high rates may make you regret moving to Texas to save on taxes — as many retirees have found out.