Texas Prop. Tax; No State tax?

Question

I've heard some stories on the Texas Prop. Tax almost being twice as much as CA. Is this indeed still true? (2.9%)

However, Texas does not have State Tax. How does this impact the higher Property Tax rate in conjunction/comparison to other states?

In CA, prop 13 has helped keep Prop. Taxes under wraps from large appreciation in home values of the past. (not so much a concern now) Is there something like this in place in Texas?

Also, what are some things that can be done, within reason, to help negate some of these expenses?

Thanks much!

Tod R. · Answer

In my experience, the tax rate is about 2.5% of appraised value (may or may not be true market value).  HOWEVER, a couple of years ago, the state revised what's called the Texas Franchise Tax rules.  What was previously a modified income tax on corporation only, was expanded to include all forms of entities, partnerships, LLC's.  Now you(any entity other than an individual) basically pay a small percentage of your net income.  When they passed this change, tax rates for the school districts went down slightly to help offset this new tax burden.  Unfortunately, the appraisal districts figured out fairly quickly that they could raise the appraised value and virtually double up on the tax revenues.  All that being said, when I am doing a quick calculation of property taxes, I use 3% (for large cities) as a conservative ballpark guess.

Jon Holdman · Answer

I've lived in both Texas and California, and yes, the property taxes are much higher in Texas than CA.  I'm not sure comparing the taxes on a "median priced home" is a meaningful number because CA prices are just stupid.

On a house with the same value, which is what someone would realistically buy, taxes in TX would indeed be about double what they would be in CA.

Dave Toelkes · Answer

Yes, TX may have a higher property tax rate than CA.  TX also has oil industry revenues in lieu of a personal income tax to fund government operations.

However, when you compare the actual property tax paid on the median priced property in CA to the tax paid on the median priced property in TX, I bet the TX property tax will be significantly lower than the amount paid in CA.