The first question almost every buyer moving here asks is some version of the same one: Texas has no state income tax, so is it cheaper? The honest answer is that it depends entirely on your income, and that the trade is real in both directions.
The trade, stated plainly
Texas levies no personal state income tax. It funds schools, counties, cities, and hospital districts largely through property tax instead. So the tax you stop paying is proportional to what you earn, and the tax you start paying is proportional to what your house is worth. Those two things are not correlated, which is why the same move is a saving for one household and a cost for the next.
A two-earner household on a high income moving from a state with a meaningful income tax usually comes out ahead, sometimes substantially. A retired couple with modest income buying a large house often does not. Neither of those is a slogan, and neither is true of everyone.
Why we will not print a rate here
You will find plenty of pages quoting a single Austin property tax rate. Treat all of them with suspicion, including any that were accurate the day they were written.
Your rate is the sum of several overlapping jurisdictions: the county, the city, the school district, the community college district, and often a hospital district or a MUD. Each sets its own rate annually. Two houses a mile apart can sit in different school districts and different MUDs and carry noticeably different bills on the same assessed value. A number typed into a blog post in 2021 is not your number, and quoting one as though it were is how a buyer builds a budget on sand.
So the two places to look, both primary sources:
- Travis County Tax Office, for the actual jurisdictions and rates on a specific property.
- Texas Comptroller, property tax, for how assessment, protest, and exemptions work statewide.
A worked example, with the numbers as inputs
The arithmetic matters more than any single rate, so here is the shape of it. Take an assessed value, subtract the exemptions you qualify for, multiply by the combined rate for that specific address, and divide by twelve to get the monthly figure your lender will escrow.
Run that with your own numbers rather than ours. If a house is assessed at $600,000 and you qualify for the homestead exemption, the taxable value drops before the rate is applied at all, and the difference between claiming it and forgetting to is not small. The homestead exemption also caps how fast your assessed value can rise year over year, which matters more in a market that moves quickly than the headline rate does.
The three things people miss
The homestead exemption is not automatic. You file for it, and you file after you close and occupy. People who move in December and forget lose a year.
Your first year is assessed on the previous owner's value. If they had owned for a decade under a capped assessment, your second-year bill can jump sharply when the property is reassessed at what you paid. Budget for the second year, not the first.
A MUD is a separate line. Much of the newer construction outside the older city limits sits in a Municipal Utility District that funded its own water and wastewater infrastructure and repays it through your tax bill. It is not a reason to avoid those neighborhoods, and it is a reason to ask before you fall for the house.
What we do about it
Before you write an offer we pull the actual jurisdictions for that address, not the neighborhood average, and show you the monthly number with the exemptions you will qualify for. If the difference between two houses you like is mostly tax rather than price, that is worth knowing while you can still act on it.