January 15, 2021

What does the Texas Constitution say about property tax?

The state of Texas levies no income tax on its residents. Property taxes account for over half of all local and state tax revenue.

What is the Texas local property tax?

Texas local property tax is exactly what it sounds like - a local tax, that is assessed locally, collected locally, and then used locally to provide local residents with several benefits. Numerous local governments may tax your property, such as school districts, cities, counties and various special districts like hospital, junior college or water districts. The state of Texas has over 4,100 local governments that collect and utilise these property taxes. Taxes paid are used to fund local schools, streets, roads, police, fire protection and many other services. Each of these local governments determines the amount of property taxes it intends to collect and sets its own tax rate.

In the Texas Constitution, property taxes are governed by five basic principles.

  • Taxation must be equal and uniform. No single property or type of property should pay more than its fair share. Taxes on property are determined by its value. If, for example, your property is worth half as much as your neighbor's property (after any exemptions that apply), your tax bill should be half as much. Therefore, a uniform appraisal is very important.

  • Generally, all property must be taxed based on its current market value. That is the price a property would sell for if both buyer and seller seek the best value when neither is under any pressure to buy or sell. The Texas Constitution provides certain exceptions to this rule, such as the use of 'productivity values' for agricultural and timber land. Such land is taxed based on the value of what it produces, such as crops and livestock, rather than its sale value. This lowers the tax bill for such land.

  • Each property in a county must have a single appraised value. This means local governments cannot use different values for the same property; all must use the same value. This is guaranteed by the use of county appraisal districts. The 1979 amendment to the Texas Constitution created a single property tax "appraisal district" in each county for the purpose of providing a uniform appraised value for all property in a county applicable to all taxing authorities. (previously, each taxing authority assessed property individually which frequently resulted in dissimilar values)

  • All property is taxable unless federal or state law exempts it from the tax. These exemptions may exempt all or part of your property's value from taxation.

  • Property owners have a right to reasonable notice of increases in their appraised property value.

Other provisions under the Texas Constitution

Article 8 of the Texas Constitution of 1876 places various restrictions on the ability of the Legislature and local governments to impose taxes. Most of these restrictions concern local property taxes. Section 1-e prohibits statewide property taxes in Texas.

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