Why Are Property Taxes So High in Texas? (And What Out-of-State Homebuyers Need to Know)

By Allen Deaver, Asset Realty

If you’re thinking about buying a home in Central Texas—or relocating from out of state—one question comes up almost immediately:
“Why are property taxes so high in Texas?”

It’s a fair question. Texas is known for opportunity, growth, and no state income tax… but that comes with a tradeoff. Let’s break it down in a clear, practical way so you can make smart real estate decisions.

The Big Reason: No State Income Tax

Texas is one of the few states that does not collect a state income tax. While that’s a major financial benefit for many homeowners, the state still needs to fund:

Public schools
Infrastructure (roads, utilities, etc.)
Emergency services
Local government operations
So instead of income tax, Texas relies heavily on property taxes to fund these essential services.

Local Control Drives Tax Rates

Property taxes in Texas are set at the local level, not by the state. That means your total tax rate is made up of several entities, including:

School districts (this is usually the largest portion)
Cities
Counties
Special districts (like MUDs or emergency services)
In fast-growing areas like Kyle, Buda, and San Marcos, communities are expanding quickly—which can lead to higher tax rates to support that growth.

Rapid Growth = Increased Demand for Services

Central Texas has been one of the fastest-growing regions in the country. With that growth comes a need for:

New schools
Expanded roads and highways
Utilities and infrastructure upgrades
All of that requires funding—and property taxes help make it happen.

Home Values Are Rising

Another key factor is appreciation. As home values increase, your property tax bill can increase as well—even if the tax rate stays the same.

This is especially important for homeowners in high-demand areas where values have risen significantly over the past few years.

The Good News: There Are Ways to Reduce Your Tax Burden

While property taxes can feel high, Texas does offer several exemptions and strategies to help homeowners save money:

Homestead Exemption (for primary residences)
Over-65 Exemption
Disabled Veteran Exemptions
Tax Protests (you can challenge your assessed value annually)
Taking advantage of these can make a meaningful difference in your overall cost of ownership.

What This Means for Buyers

When buying a home in Texas, it’s critical to look beyond just the purchase price. You’ll want to factor in:

Estimated property taxes
Tax rate for the specific neighborhood
Whether the home qualifies for exemptions
Long-term affordability
This is where working with a knowledgeable local agent really matters.

My Advice as a Central Texas Real Estate Expert

Property taxes in Texas aren’t necessarily “high” when you look at the full picture—they’re just structured differently.

For many buyers, the lack of state income tax combined with strong home appreciation and job growth still makes Texas an excellent long-term investment.

The key is understanding the numbers upfront so there are no surprises later.

Let’s Build a Smart Buying Strategy

If you’re considering buying in Kyle, Buda, San Marcos, or anywhere in Central Texas, I can help you break down the true cost of homeownership—including property taxes—so you can move forward with confidence.

Why Are Property Taxes So High in Texas?