Texas has no state income tax, which surprises a lot of buyers moving from other states — but it also means property taxes are a bigger recurring cost than in many parts of the country. Here’s what to actually budget for.
Who sets the rate
Property tax rates in Texas are set locally — by the county, city, school district, and any special districts (like a MUD, or Municipal Utility District, common in newer master-planned communities) that apply to a specific property. That means the effective rate can vary meaningfully even between neighboring subdivisions.
Why this matters for your monthly payment
Property taxes are typically collected as part of your monthly mortgage payment through an escrow account, alongside principal, interest, and insurance. A property with a higher combined tax rate can have a noticeably higher monthly payment than a similarly priced home with a lower rate — always check the actual current tax bill for a specific property, not just the sale price.
Homestead exemption
If the home will be your primary residence, Texas offers a homestead exemption that reduces the taxable value of the property — worth filing for with the county appraisal district after closing, since it isn’t automatic.
MUD and PID fees
Many newer developments in fast-growing parts of DFW (particularly in Collin, Denton, and parts of Kaufman and Rockwall counties) are inside a MUD or PID (Public Improvement District), which adds an additional line item beyond standard property tax to fund infrastructure. This is disclosed in the listing and closing documents — worth asking about directly before you fall in love with a new-construction home.
Every property’s tax situation is a little different — happy to pull the actual current numbers for any listing you’re considering.