Serving Harris, Fort Bend, Montgomery, Brazoria & Galveston Counties — updated for the 2026 tax year.
Quick answer: Texas has no state income tax, but it makes up for it with some of the highest property tax rates in the country. In the Houston metro, most homeowners pay an effective property tax rate between roughly 1.5% and 2.5% of their home’s market value each year, depending on the county, city, school district, and whether the property sits inside a Municipal Utility District (MUD). Two big 2026 changes work in buyers’ favor: the school-district homestead exemption jumped to $140,000, and seniors 65+ now get a $200,000 school exemption. Investors should note a valuable 20% appraisal cap on rentals is set to expire at the end of 2026.
If you’re buying, selling, or investing anywhere from Katy to Galveston, here’s what you actually need to know — in plain English.
Why are Texas property taxes so high?
Texas is one of only a handful of states with no personal state income tax. Local governments — school districts, counties, cities, and special districts — still need to fund schools, roads, police, fire, and flood control, so they lean heavily on property taxes to do it.
That’s why a Texan and a Californian with similarly priced homes can pay wildly different property tax bills: the Texan usually pays more in property tax, but keeps far more of their paycheck. For anyone relocating to the Houston area, this is the single most important number to understand before you set a budget.
How Houston-area property tax bills are calculated
Your annual property tax bill comes down to a simple formula:
(Appraised value − exemptions) × combined tax rate = your tax bill
Three things drive that number:
- Appraised value — set each year by your county appraisal district (HCAD in Harris, FBCAD in Fort Bend, and so on), meant to reflect market value as of January 1.
- Exemptions — the homestead exemption and others that lower your taxable value (more below).
- Combined tax rate — the sum of every taxing entity your property falls inside: county, city, school district (ISD), and often a MUD, hospital district, or college district.
That last point trips up a lot of buyers. Two houses on opposite sides of the same street can have different tax bills if they’re in different school districts or MUDs.
Property tax rates by county (2026 estimates)
Rates vary by the exact city and school district, but here’s how the five Houston-metro counties generally compare. These are effective rates — annual tax as a percentage of market value.
| County | Typical effective rate | Notes |
|---|---|---|
| Harris | ~2.0% – 2.3% | Among the highest in Texas; includes flood control, hospital & Port of Houston districts |
| Fort Bend | ~1.9% – 2.5% | Many newer, MUD-heavy communities (Katy, Richmond, Sugar Land) sit at the higher end |
| Brazoria | ~1.7% – 2.3% | Lower county-wide; Pearland and newer developments run higher |
| Montgomery | ~1.5% – 2.4% | Lower on average; The Woodlands and MUD-served areas top out near the high end |
| Galveston | ~1.6% – 2.0% | Generally more moderate; varies by city and island vs. mainland |
Rates are approximate and change annually. Always confirm the exact rate for a specific address with the county appraisal district before you buy.
What is a MUD, and why does it matter?
A Municipal Utility District (MUD) is a special taxing district that funds water, sewer, and drainage infrastructure in newer developments — extremely common across Fort Bend, Montgomery, and Brazoria counties.
A MUD can add 0.25% to 1%+ on top of your base rate. New MUDs tend to have higher rates that decline over time as the district’s construction debt gets paid down. If you’re comparing a brand-new build to an established neighborhood, the MUD is often why the newer home carries a bigger tax bill. It’s not a reason to avoid new construction — just a number to factor into your monthly budget.
The 2026 homestead exemption: bigger savings this year
If the home is your primary residence, the homestead exemption lowers the taxable value used for your school-district taxes — usually the largest slice of your bill.
For the 2026 tax year, following voter approval of Proposition 13 in November 2025:
- The general school-district homestead exemption rose from $100,000 to $140,000.
- Homeowners 65 or older or disabled get an additional $60,000 (up from $10,000), for a combined $200,000 school-district exemption. For many seniors, that eliminates school property taxes entirely.
If you already have a homestead exemption on file, the increase applies automatically — no refiling needed. New homeowners should file with their county appraisal district; the exemption is free, and you never need to pay a third party to file it for you.
Two appraisal caps that limit how fast your taxes can rise
Texas limits how much your taxable value can jump year over year — but the rules differ for your home versus an investment property:
- Homestead (10% cap): Your primary home’s appraised value can’t rise more than 10% per year (plus the value of any new improvements). This cap is permanent.
- Non-homestead “circuit breaker” (20% cap): Rentals, second homes, and smaller commercial properties valued at $5.32 million or less are capped at 20% per year. This is where investors need to pay attention: this protection is scheduled to expire on December 31, 2026. Unless the Legislature renews it, 2026 may be the last year rental owners get this cushion.
Key deadlines you can’t miss
- April 30, 2026 — Deadline to file for a homestead (or over-65/disabled) exemption for the current tax year.
- May 15, 2026 — Deadline to protest your appraised value (or 30 days after your appraisal notice is mailed, whichever is later).
Should you protest your appraisal?
Often, yes. Appraisal districts value hundreds of thousands of properties with limited data, and errors are common. You can protest on your own with recent comparable sales and photos of any condition issues, or hire a protest service that works on contingency. In a rising market like much of the Houston metro, protesting is one of the most reliable ways to keep your bill in check — and there’s no penalty for a value that doesn’t get reduced.
What real estate investors should know for 2026
Beyond the 20% circuit-breaker expiration above, two changes benefit investors who hold property through a business:
- Business Personal Property exemption raised to $125,000 (from just $2,500) starting in 2026 — relevant if you hold furnishings, equipment, or other tangible business property.
- Intangible personal property (such as certain financial assets) is no longer taxable in Texas as of January 1, 2026.
For buy-and-hold investors, the takeaway is simple: property taxes are one of your largest recurring expenses, they directly compress cash flow, and they can rise faster on non-homestead property. Model them carefully into every deal — and remember that a rental doesn’t qualify for the homestead exemption or 10% cap.
Frequently asked questions
How much are property taxes on a $500,000 home in Houston?
As a rough estimate, at a ~2.1% effective rate a $500,000 home runs about $10,500 per year before exemptions. With the $140,000 homestead exemption reducing your school-taxable value, a primary residence typically lands meaningfully lower. Always confirm with the specific address’s rate.
Do property taxes go up when I buy a house?
Texas is a non-disclosure state, so your purchase price isn’t automatically reported to the appraisal district. But appraised values still tend to rise toward market value over time, so budget for increases — especially in fast-appreciating areas.
Which Houston-area county has the lowest property taxes?
It depends on the specific city and school district, but Montgomery and Galveston counties often run more moderate on average than Harris or Fort Bend. The MUD situation for a given address matters more than the county alone.
Are property taxes higher on new construction?
Frequently, yes — usually because newer communities sit inside MUDs with higher rates to pay off infrastructure debt. The base home may also be appraised at full current value.
Can seniors freeze their property taxes in Texas?
Yes. Homeowners 65+ qualify for a school-district tax ceiling that freezes the school portion of the bill at the year they qualify, on top of the larger $200,000 exemption.
Thinking about buying, selling, or investing in the Houston area?
Property taxes are just one piece of the affordability picture — and the right neighborhood, school district, and MUD situation can make a real difference to your monthly cost. The Monroe Team helps buyers, sellers, and investors across Harris, Fort Bend, Montgomery, Brazoria, and Galveston counties make informed moves.
Reach out to The Monroe Team at 832.598.1885 or kaleb@thekmteam.com to talk through your goals.
This article is for general informational purposes only and is not tax or legal advice. Property tax rates, exemptions, and laws change and vary by location; confirm current figures with your county appraisal district or a qualified tax professional before making decisions.