Homeowners in Texas face a lot of burden with property taxes. Research shows that property rates are one of the highest in the United States. The high tax rates are due to several reasons, like the absence of state income tax, population growth, increased property values, etc.
As Texas is an income-tax-free state, the government relies heavily on property tax for the state’s growth and development, including infrastructure, roads, schools, libraries, and hospitals.
If you are dealing with an increased tax rate problem, an expert from tax resolution services in Dallas may be able to help you with some deductions. Read this blog to learn more about some of the common reasons behind the high property rates in Texas.
Top reasons why property taxes are higher in Texas
Limited state income tax and reliance on property taxes
Texas’s high property taxes are mostly caused by the lack of a state income tax. The Texas government mostly depends on property taxes, in contrast to other states that levy taxes to pay for public services & infrastructure. It serves as their main source of income.
Since homeowners have a burden of funding essential services, like schools, libraries, and roads, they end up paying more taxes as their property value increases.
Taxes are set at the local government level
The property taxes that a homeowner is supposed to pay each year are not determined by the state government. Instead, this amount is determined by the local authorities, causing it to vary from location to location.
Depending on where you live, there might be additional small taxes added to your property tax bill. This could be for things like hospitals or libraries. Therefore, the final amount you pay on taxes depends on the value of your house and the county you live in.
Education funding and local property taxes
Education funding also plays an important role in property rates in Texas. The schools and colleges in Texas rely on property tax for financial support. Which means the cost would be paid from the pockets of the homeowners. Therefore, the need to pay adequate funds for quality education often contributes to high property taxes in Texas.
Property values keep increasing
The property tax you pay depends on the estimated value of your house. The higher the value, the higher the tax.
For example, if your house is valued at $250,000, and the property tax rate is 2%, which the local government sets, you will pay about $5,000 in property tax each year. As your house value increases, your property tax will also go up and lead to higher tax bills than expected.
However, if you think your house has been overvalued, you have the right to file a formal protest. This process is first done informally with the appraisal district staff.
However, if an agreement is not reached, you can make a formal protest with the appraisal review board. This will cause your property to be assessed at a lower value and reduce property tax.
Population growth and development
The population in Texas has dramatically increased in recent years, making it the second most populous state in the US. This population growth creates a high demand for development.
With a lot of people moving in, the state needs to build up more infrastructure to keep up with the growing population. And to fund the infrastructure, the state relies on property tax. Therefore, homeowners may experience high property taxes as a result.
Hire a tax professional today!
If you are from Texas, you probably have to pay a large amount of taxes. However, there are legal ways to reduce the amount. You may forget to claim deductions, or your house may be assessed at a very high rate. This is where you should consult a tax professional to know your legal options. Hire one today!
