Owning a home in Austin is a dream until the tax bill hits the kitchen table. Honestly, it’s the "Texas Trade-off." We don't have a state income tax, so the local government gets its pound of flesh through property valuations instead. If you've been watching the news lately, you've probably heard about the massive $6.3 billion budget the Austin City Council just passed for the 2025-2026 fiscal year.
It’s a lot to digest.
Basically, the city set the property tax rate at 57.4 cents per $100 of taxable value. That’s actually five cents higher than what they are legally allowed to charge without asking us first. Because of that, we had a major election where voters had to decide on Proposition Q. If you’re a median homeowner with a house valued around $494,803, this specific city hike adds about $302 to your annual bill. And that’s just the city’s portion. You’ve still got the school district, the county, and the healthcare district waiting in line.
How the Math Actually Works
Your tax bill isn't a single number pulled from a hat. It’s a calculation of two distinct parts: the Appraised Value and the Tax Rate.
The Travis Central Appraisal District (TCAD) decides what your house is worth as of January 1st each year. They use "mass appraisal" models. They aren't walking through your front door; they are looking at what your neighbor’s house sold for and using an algorithm to guess yours. This is where things get messy. Algorithms miss the fact that your roof is leaking or your foundation is settling.
Once that value is set, every "taxing unit" drops their rate on top of it. In Austin, you’re usually paying:
- The City of Austin
- Austin ISD (or whatever school district you’re in)
- Travis County
- Central Health (Travis County Healthcare District)
- Austin Community College (ACC)
If you live in a MUD (Municipal Utility District) on the outskirts, your rate might be even higher because you’re paying for the infrastructure that brought water to your suburban cul-de-sac.
The $140,000 Shield
Here is the good news. Texas voters recently passed a massive overhaul. The General Homestead Exemption for school district taxes jumped from $100,000 to **$140,000** for the 2026 tax year. This is huge. If your home is appraised at $500,000, the school district (which is usually the biggest chunk of your bill) only taxes you as if it’s worth $360,000.
Crucially, this change was retroactive to 2025. If you haven't seen that credit on your escrow yet, call your lender.
Why Your Neighbor Pays Less Than You
It feels unfair when you see a neighbor in an identical house paying $3,000 less in taxes. They aren't necessarily "cheating." They probably just have a 10% Appraisal Cap.
If you have a homestead exemption, TCAD cannot increase your taxable value by more than 10% per year, no matter how much the market explodes. If you just bought your house last year, you don't have that protection yet. You’re paying based on the full market price you paid, while the guy next door who has lived there since 1998 is still capped at a much lower valuation.
Seniors get an even better deal. If you are 65 or older, your school district taxes are frozen. They will never go up as long as you live there, unless you do a major renovation like adding a pool or a new wing. The exemption for seniors also got a massive boost recently—it’s now an additional $60,000 off the value.
The Art of the Protest
Don't just take TCAD’s word for it. Seriously.
Almost 38% of Travis County property owners protest their taxes, and a huge chunk of them win. In 2025 alone, protests trimmed about 4.6% off total housing values across the county. You have until May 15th (usually) to file a protest.
You don't need a high-priced lawyer, though many people use them. You just need evidence.
- Photos of damage: Show the appraiser the cracks in the drywall or the 20-year-old HVAC.
- Equity comparisons: Look at what similar houses nearby are valued at on the TCAD website. If their values are lower than yours for no reason, you have a case for "unequal appraisal."
- Recent sales: If houses on your street are selling for less than your appraised value, print those listings out.
The process starts with an "informal review." You sit down with a county appraiser. You show your photos. They might offer you a $20,000 reduction on the spot. If you don't like their offer, you go to the formal Appraisal Review Board (ARB) hearing. It’s a bit like small claims court, but for your house.
Commercial Real Estate is Feeling the Pinch
It isn't just homeowners. Business owners in Austin are seeing valuations skyrocket. Offices in downtown Austin saw their taxable values drop by billions recently, but only because they fought tooth and nail in the protest process. If you own a small business, you should know that the exemption for "Business Personal Property" (the stuff inside your office like computers and furniture) recently jumped to $125,000. That’s a massive leap from the old $2,500 limit.
What Most People Get Wrong
People often think that if the city raises the tax rate, their bill will definitely go up. Not always. If the city raises the rate but your property value stays flat or drops (which happened in some parts of Austin recently), your bill might actually stay the same.
Also, property taxes are paid in arrears. Your bill arrives in October or November, but it’s for the year that just passed. If you sell your house in June, you’ll usually see a "tax proration" on your closing statement where you pay the buyer for the six months you lived there.
Practical Steps to Lower Your Bill Right Now
Stop reading and do these three things if you want to save money:
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- Verify your Homestead Exemption: Go to the Travis Central Appraisal District website (traviscad.org) and search for your address. Look for the "Exemptions" section. If it doesn't say "HS," you are throwing money away. It is free to apply. Do not pay a company to do this for you.
- Mark May 15th on your calendar: This is the protest deadline. Even if you think your value is "fair," it is worth checking the sales data. If the market cooled off in your neighborhood, TCAD might not have noticed yet.
- Check for the "Senior Freeze": If you or your spouse turned 65 this year, apply for the over-65 exemption immediately. You get the benefit for the entire year, even if your birthday is in December.
The Austin tax landscape is aggressive, but it’s manageable if you stay on top of the deadlines. The 2026 tax year is shaping up to be one of the most complex in years due to the new state-level exemptions clashing with local budget increases. Keep your records, watch the mail in April for your valuation notice, and never accept the first number they give you.