According to Go Banking Rates, Texas ranks sixth in the US for the highest property tax rates. Homeowners and commercial property owners pay over 33% more than the national average. But why are property taxes so high in the Lone Star state?

In this post, we’ll share a brief overview of how property taxes are calculated in the state, along with the three main reasons Texas property taxes are higher than most US states.

How Property Taxes Are Calculated in Texas

Property taxes in Texas are determined through an assessment of a commercial or residential value. In other words, residents and owners have to pay a small percentage of their property’s appraised value. Every city has varying tax rates depending on the median property value and other factors. Most cities charge between 1% and 2%. However, some cities can charge over 2.5%.

For instance, if your home is valued at $400,000 and your tax rate is 1.80%, you’d be required to pay $7,200 per year.

3 Reasons Texas Property Taxes Are Among the Highest in the US

1. Taxes Are Set By Local Governments

Texas property taxes aren’t set or regulated by the state government. Instead, it’s the local government in every city that determines your property tax bill. Moreover, any changes to the rates following public votes must be passed by the state legislature.

2. Low Sales Taxes and Zero Income Taxes

One of the main reasons Texas property rates are higher than most states is that the state is highly dependent on tax revenue due to zero income taxes and low sales taxes. As a result, the burden of revenue generation for infrastructure development and public services falls on property taxation.

3. Increasing Property Values

In the last few years, Texas has transformed immensely and is on the verge of becoming the nation’s primary commercial hub. Hundreds of businesses, including industry giants like Tesla, Oracle, and HP, among others, have moved their operations from California and other states due to its friendlier tax laws and prices.

As a result, the demand for residential and commercial properties has been on the rise, resulting in increasing property values, especially in high-value cities and developing regions.

Wrapping Up

If you’re looking to invest in a commercial or residential property in Rio Grand Valley, head to CHRE right away and explore our vast inventory with options in every major city and town. So, get in touch with our team right away, and let us answer all of your questions related to Texas property taxes and help find the best options in the market for your needs, budget, and preferences.