How Texas property tax works and what the homestead saves

Who sets your property tax?

Two separate bodies decide your bill.

• The appraisal district in your county sets the value. By law, property is appraised at its market value as of January 1 (Tax Code § 23.01). The district’s chief appraiser also decides whether you qualify for an exemption.
• Each taxing unit sets a rate: the county, the city, the school district, and special districts such as a hospital or community college district. Rates are quoted per $100 of taxable value.

The formula for each unit is simple: (appraised value − exemptions) × rate ÷ 100. Your bill is the sum for all the units where the home sits.

What does the homestead exemption save?

A residence homestead is the home you own and occupy as your principal residence (Tax Code § 11.13(j)). The exemptions below remove part of its value from taxation.

The school amount has changed twice recently:

• 2023: S.B. 2 raised it from $40,000 to $100,000, for tax years beginning on or after January 1, 2023.
• 2025: S.B. 4 raised it from $100,000 to $140,000, for tax years beginning on or after January 1, 2025. The change depended on a constitutional amendment, and the Tax Code records it as effective November 4, 2025. Article VIII, Section 1-b(c) of the Texas Constitution now states the $140,000 figure.

The Comptroller gives a simple example: a home appraised at $300,000 with the $140,000 exemption pays school taxes as if it were worth $160,000.

If you are 65 or older or disabled and receive the school exemption, your school tax on that home generally cannot increase while it remains your homestead, except for new improvements (Texas Constitution, Art. VIII, § 1-b(d)).

How does the 10% cap work?

Once a home has the homestead exemption, the appraisal district may not raise its appraised (taxable) value by more than 10% over the prior year’s appraised value, plus the value of new improvements (Tax Code § 23.23(a)). The district still records the full market value.

The cap starts on January 1 of the tax year after the first year you qualify for the exemption. It ends when neither you, your spouse nor your surviving spouse qualifies anymore, for example after a sale (§ 23.23(c)).

Example: a homestead appraised at $400,000 last year, with a market value of $460,000 this year and no new improvements, can be taxed on at most $440,000.

When to apply and when to protest

You apply once with the appraisal district, on Comptroller Form 50-114. The exemption then stays in place until the home changes owners or your eligibility changes (§ 11.43(c)). If you buy after January 1, you can get the general exemption for the rest of that year if the previous owner did not receive it (§ 11.42(f)).

A late payment costs 6% for the first month plus 1% per extra month, reaching 12% on July 1, plus 1% interest per month (Tax Code § 33.01).

Example: a $400,000 home in Dallas

This example uses the 2026 rates published by the Dallas County Tax Office, which collects for these units. It uses the exemptions the Dallas Central Appraisal District lists for 2026: a 20% local option at the county, Parkland Hospital, Dallas College and the City of Dallas, and $140,000 plus a 10% local option at Dallas ISD. The home is a homestead, the owner is under 65, and the cap does not apply.

Without any exemption, the same home would owe $9,003.04 (2.25076% of $400,000). The homestead exemptions save $2,786.34 in this example. Your actual bill depends on your exact taxing units, such as a public improvement district, and on your appraised value.

For the costs you pay at closing, including the prorated property tax, see closing costs in Texas. For the full city picture, see the Dallas guide. Lenders often collect the tax monthly through an escrow account.