Texas Property Taxes: From Market Value to the Annual Bill

A home can have several different tax values

A Texas property record can show a market value, an appraised value limited by a homestead cap, and different taxable values for different taxing units. These numbers answer different questions: what the property is worth, how much value enters the tax calculation before exemptions, and how much each unit actually taxes. The Comptroller describes valuation limits separately from exemptions.[2][3]

This is a Texas guide, not a nationwide U.S. rule. Texas has no state property tax; local governments set rates and collect property taxes. A county, school district, city and applicable special districts can tax the same property.[1] Understanding the annual bill therefore requires more than multiplying a home's advertised price by one headline rate.

Separate market value from the capped appraisal

With limited exceptions, Texas appraisal districts appraise taxable property at market value as of January 1. The Comptroller describes market value through an open-market transaction under specified conditions, not simply the owner's preferred selling price.[2] A later asking price is consequently not a substitute for checking the tax-year valuation.

For a qualifying residence homestead with an applicable limitation, the formula is: limited appraised value = the lesser of current market value and (prior-year appraised value × 1.10 + market value of new improvements).[2] The cap limits the appraisal used before exemptions; it does not rewrite the property's market value.

The limitation begins January 1 of the tax year after the owner qualifies for the homestead exemption. New improvements are treated separately; ordinary repairs and maintenance are not new improvements under the cited guidance.[2] Do not assume every purchase immediately receives the seller's capped number.

Locate exemptions after the appraisal step

Partial exemptions remove a fixed amount or percentage of value from taxation. Some exemptions are mandatory and others are local options, so the applicable exemption is not necessarily identical across taxing units.[3] For the simplified calculation here, each unit's taxable value equals its applicable pre-exemption appraised value minus its approved exemption, with a floor of zero.

If a record uses the label “assessed value,” check the field definition rather than inserting another automatic discount. In this worksheet, “assessed/pre-exemption value” means the limited appraised amount; it is not a separate percentage of market value. Match the actual record's definitions before using that convention.

Follow one complete hypothetical calculation

All dollar inputs, exemption amounts and rates below are invented teaching assumptions, not legal exemption allowances, current local rates or a 2026 tax quotation. Assume an eligible homestead whose cap is already effective, a full tax year, no special valuation, no tax ceiling and no other adjustments.

• Prior-year appraised value: $300,000.
• Current market value, including new improvements: $450,000.
• Market value of qualifying new improvements: $20,000.
• Cap calculation: $300,000 × 1.10 + $20,000 = $350,000.
• Limited appraised/worksheet assessed value: min($450,000, $350,000) = $350,000.

The $100,000 gap between market and limited appraisal is a cap effect, not an exemption. Now assume three taxing units with deliberately different exemption inputs:

Each row uses annual tax = taxable value ÷ 100 × dollars charged per $100. For example, the county calculation is $330,000 ÷ 100 × $0.40 = $1,320. Total modeled annual tax is $2,000 + $1,320 + $1,750 = $5,070.

Keep the rate unit and tax base together

Texas tax-rate guidance uses rates expressed per $100 of taxable value.[5] A quotation of $0.40 per $100 means 0.40%, or a decimal multiplier of 0.004; multiplying taxable value by 0.40 would be a hundredfold error.

The example's rates sum to $1.90 per $100, but applying that total to the school's $200,000 taxable value gives only $3,800. That is wrong because the county and city have different bases. Calculate each unit separately, then add the taxes. Equally, $450,000 × 1.90% = $8,550 ignores both the cap and exemptions.

A value cap is not a tax-bill cap

Local governing bodies set their own rates, while exemptions remove value from the tax base.[1][3] The appraisal limitation therefore cannot, by itself, guarantee the same percentage limit on the bill.

Even falling market value need not produce a lower capped appraisal. Continuing the example into another hypothetical year, assume market value falls to $430,000 and there are no new improvements. The calculation becomes min($430,000, $350,000 × 1.10) = $385,000: a lower market estimate but a higher pre-exemption base. This is arithmetic under the stated cap formula, not a market forecast.

Reconcile the records before budgeting

• Match the property account, ownership and tax year.
• Check January 1 market value, prior appraisal, cap eligibility and new improvements.
• List every taxing unit and its approved exemptions separately.
• Confirm each rate's units and whether it is proposed or adopted.
• Recalculate each taxable base and tax line; reconcile the total with the bill.

The no-new-revenue rate is a comparison measure, not automatically the adopted billing rate.[5] Most exemption applications go to the appraisal district, which determines qualification.[3] Resolve an unexplained field or missing exemption before treating an online estimate as final.

Dates, exclusions and limits

Editorial and source-check date: September 21, 2026. The cited webpages display no publication date. This article intentionally does not quote current statutory exemption dollar amounts. Verify the applicable year's law, approved exemptions and adopted local rates.

The calculation excludes special appraisals, separate tax ceilings, midyear eligibility changes, penalties, interest and other adjustments. It is educational, not an individualized bill or legal advice. Texas generally allows payment until January 31 of the following year, but confirm the actual bill and applicable exceptions.[1]