Texas Property Tax 101: Exemptions for New Residents

If you are moving to Houston from states like California or New York, get ready for a change. Texas has no state income tax, but property taxes are higher. This money pays for schools, police, and roads.

How Property Taxes Work

Your tax bill is your home value times your local tax rate. If your home is worth $400,000 and your rate is 2.5%, your tax is $10,000 a year.

The Homestead Exemption: Your Biggest Save

Every new resident should file for a Homestead Exemption. This is a law that lowers your tax bill if you live in the home as your main residence.

• The Benefit: You don't pay school taxes on $100,000 of your home value.
• The Savings: Most families save $1,200 to $1,400 every year.
• The 10% Cap: This law also stops your home's taxed value from going up more than 10% in one year.

What is a MUD Tax?

In many new Houston suburbs, you will see a MUD (Municipal Utility District) tax. This pays for water and sewer pipes in new areas. It usually adds 0.5% to 1.0% to your rate but goes down as the debt is paid off.