It’s that time of the year when tax appraisals have arrived. I’ve heard the concerns of so many West Texans when they saw the huge increase in their tax appraisal and I can tell you Shelby and I had the same experience. Seeing how much the appraised value of our home increased this year was a surprise.
But here is what’s important to know: a dramatic increase in your property appraisal does not mean your property tax bill will also increase dramatically.
Yes, you read that right. The sticker shock from the tax appraisal you recently received likely won’t lead to the same sticker shock on your property tax bill.
I understand that might be hard to believe, so allow me to clear things up and provide some information you can hang your hat on.
First, it is important to understand how your property tax bill is calculated. Your property tax bill is made up of two parts: the appraised value and tax rate applied by each local taxing entity. County appraisal districts appraise each property tract in the county, and taxing entities, like your local school district, city or county, for example, set the property tax rates.
Your property tax bill – the revenue collected by local taxing entities – is calculated by multiplying the appraised value of your property by the entity’s tax rate. Below is the simple formula:
Appraised Value x Tax Rates = Your Property Tax Bill
With that understanding, here is something further to consider: the state does not levy or collect property tax rates. On the state level, however, my fellow lawmakers and I do set the ground rules that local governments in Texas must follow as they levy and collect property taxes. One of the largest property tax reforms in Texas History was enacted in 2019, and is known as SB 2.
I worked tirelessly to pass this bill into law which prohibits school districts from increasing REVENUE collected from property taxpayers by more than 2.5% from year to year without getting approval from voters. Similarly, city and county governments cannot increase REVENUE collected from property taxpayers by more than 3.5% without voter approval.
In other words, this state law will require local taxing entities (county, city, school district, etc.) to either: REDUCE TAX RATES substantially to offset the increased property appraisals, or else get specific permission from the voters to allow a large tax hike.
Simply put, YOU the voter, are empowered.
I want to be fully transparent. This doesn’t mean that your property tax bill won’t increase, it just means that it will not be nearly as bad as you might fear based strictly on your valuation. Also, know that the 2.5% and 3.5% thresholds are based on the total revenue collected across the county or city, it’s not based on individual properties. That means that some property taxpayers may cross the threshold while the taxing entities remain under it, thereby avoiding a vote on the rate.
Nonetheless, the release of appraisal values is just the first step in a five-month process and there are opportunities along the way to use your voice.
If you are dissatisfied with your appraised value or if errors exist in the appraisal records regarding your property, you can file a Notice of Protest with the appraisal review board (ARB). While it’s likely that by this time the deadline to file a protest this year has passed, it is an important tool you should be aware of.
Furthermore, each taxing entity will have public hearings (usually in the late summer) to discuss tax rate settings, and you have the opportunity to participate in that process and voice your concerns. Local officials need to hear from us on local tax and government issues, just like I need to hear from you on state issues. The adoption of rates will happen in conjunction with the adoption of budgets in late summer/early fall.
I hope this gives you comfort that your property tax bill may not be as high as you were thinking. Remember that you are empowered throughout this process.
God bless Texas!