Understanding Texas Property Values
Before diving into rates and exemptions, it helps to know the four distinct value types that Texas property taxation relies on. Confusing any of them — particularly appraised value vs. taxable value — leads to incorrect tax estimates.
Market Value
Market value is what the property would sell for on the open market — the price a buyer pays and a seller receives. In Texas, a nondisclosure state, the sale price is not automatically reported to the appraisal district, so the Central Appraisal District (CAD) estimates market value independently. The purchase price is one data point but does not automatically become the appraised value.
Appraised Value
Appraised value is the CAD's estimate of market value, set as of January 1 for each tax year. Texas law requires appraisal districts to reappraise all property at least once every three years, though many reappraise more frequently. For a homestead, annual increases in appraised value are capped at 10%, plus the value of new improvements. The cap applies to the appraised value, not to market value — market value can rise faster than 10% in a given year.
Capped Value
Capped value is the appraised value after the 10% homestead cap is applied. The CAD cannot raise the appraised value by more than 10% per year (plus new improvements), so the capped value may be lower than what the CAD would otherwise appraise. Non-homestead properties may qualify for a 20% cap under certain conditions. The capped value is what the cap limits; the taxable value is what remains after exemptions.
Taxable Value (also called Assessed Value in some contexts)
Taxable value is the number taxes are actually calculated on. Start with the capped value (or appraised value if a cap has not yet built up, such as in the first year before qualification), then subtract all applicable exemptions — homestead, over-65, disabled veteran, and so on. The result is the taxable value. Tax rates are applied to this number to produce the tax bill.
Example: Hypothetical illustration A home purchased for $750,000 might have a CAD-appraised market value of $740,000, a capped appraised value of $740,000 if it is the first year of ownership, and a taxable value of $600,000 after a $140,000 homestead exemption is applied for school district tax purposes.
How Does California's Proposition 13 Actually Work?
When you buy a home in California, Proposition 13 locks your property tax assessment at the purchase price. Your annual tax bill is capped at 1% of that value, and the assessed value can only increase by a maximum of 2% per year regardless of how much the market appreciates. California's top marginal state income tax rate reaches 13.3%, and that burden disappears entirely when you cross the state line into Texas.
This creates a massive gap between what long-term owners pay and what new buyers pay. A family that bought a $400,000 home in 2010 might be paying taxes on an assessed value of roughly $490,000 today, while a new buyer of the same home at its current $1.2 million market value starts paying taxes on the full purchase price from day one.
Proposition 13 also requires a two-thirds supermajority in the state legislature to raise any tax rates, which effectively locks in the 1% base rate for most properties.
"Under Proposition 13, the assessed value of a property cannot exceed its purchase price, and the assessed value can increase no more than 2 percent per year."
— California Legislative Analyst's Office, "Understanding California's Property Taxes" (November 29, 2012)
How Does Texas Property Tax Work?
Texas has no state income tax. Instead, it funds public services primarily through property taxes. Appraisal districts are required to reappraise all property at least once every three years at or near full market value, though many reappraise more frequently — but taxes are calculated on the property's taxable value — the appraised value after any applicable caps, exemptions, and special valuations. Unlike Proposition 13's 2% assessment-growth limit, Texas generally limits annual increases in a qualified residence homestead's appraised value to 10%, plus the value of new improvements. The cap does not prevent the property's market value from rising faster, and it does not limit tax-rate changes.
However, Texas does offer protections for homeowners:
- 10% Homestead Cap: Once you file a homestead exemption, your appraised value for tax purposes cannot increase by more than 10% per year, even if market value climbs faster. This is your closest analog to Prop 13's 2% cap, but it applies only to the rate of increase, not the base value.
- $140,000 Homestead Exemption: Your primary residence's taxable value is reduced by $140,000 for school district tax purposes (the largest component of most Texas tax bills). This saves the average homeowner $1,400 to $2,800+ annually depending on local school district rates.
- Over-65 and Disabled Exemptions: An additional $60,000 exemption on top of the general $140,000 — bringing the total school district exemption to $200,000 — plus a school-tax ceiling for qualifying homeowners. The ceiling does not freeze the tax rate; it caps the dollar amount of school taxes you pay. If school tax rates rise in future years, your bill stays at the ceiling amount (adjusted for any qualifying improvements to the property). Note that the ceiling can increase if you make capital improvements, and it may decline if the school district reduces its tax rate in a given year.
What Are the Actual Property Tax Rates by Texas County?
The "tax rate" that matters is the combined rate — the sum of every taxing entity's adopted rate added together: county, city, school district, hospital district, and any special districts. This is different from the effective rate, which is the total tax you actually pay divided by market value and accounts for exemptions, appraisal caps, and other reductions. The combined rate is always higher than the effective rate because it does not reflect those offsets. Here are the 2025 county-level base rates per $100 of taxable value:
| County | Base Rate (per $100) | Typical Combined Rate* |
|---|---|---|
| Kendall County (Boerne, Fair Oaks Ranch) | $0.377 | 2.0% to 2.4% |
| Bexar County (San Antonio) | ~$0.30 | 2.2% to 2.7% |
| Comal County (New Braunfels corridor) | $0.305 | 1.9% to 2.3% |
*Combined rates include all taxing entities (county, school district, city, special districts). Your actual rate depends on exact location within the county. To understand how MUDs, PIDs, and other special taxing districts can add hundreds to your monthly payment, see our detailed guide.
How Much Will You Actually Pay in Taxes After Moving to Texas?
Let's walk through a concrete example. You sell a $1.2 million home in California and buy a comparable property in Boerne.
Scenario: $1.2M California Home Sells, Buy Equivalent in Boerne
| Factor | California (Bay Area) | Boerne, TX (Kendall Co.) |
|---|---|---|
| Home value | $1,200,000 | $425,000 |
| Appraised value (before exemptions) | $1,200,000 (new purchase) | $425,000 |
| Combined Rate | ~1.1% (incl. special assessments) | ~2.0% (combined rate) |
| Annual property tax | ~$13,200 | ~$8,500 |
| After TX homestead exemption | N/A | ~$5,700 (saving ~$2,800) |
| State income tax (on $200K income) | ~$17,500 (9.3% bracket) | $0 |
| Total annual tax burden | ~$30,700 | ~$12,100 |
The key takeaway: while Texas property tax rates are nominally higher, most California relocators buy significantly more house for less money, and the elimination of state income tax creates an overall tax savings that typically ranges from $15,000 to $40,000 per year for households earning $150,000 or more. If you are a first-time buyer, explore Texas first-time buyer programs and down payment assistance to reduce your cash-to-close.
"The general homestead exemption reduces the taxable value of a homestead by $140,000 for school district tax purposes. This is in addition to any other exemption to which you may be entitled."
— Texas Property Tax Code, Section 11.13
How Does the Texas Tax Protest Process Work?
Every year, the county appraisal district sends you a notice of your property's assessed value. If you believe the value is too high, you have the right to protest. Here's how it works:
- Review your appraisal notice (typically mailed in April or May). Compare it to recent comparable sales in your neighborhood.
- File a protest with the county appraisal district by the deadline (usually May 15 or 30 days after the notice, whichever is later). This can be done online in most counties.
- Informal hearing: Most protests are resolved at an informal meeting with an appraiser. Bring comparable sales data, photos of any property issues, and a clear explanation of why you think the value is too high.
- Formal hearing: If the informal meeting doesn't resolve it, you can appear before the Appraisal Review Board (ARB), a panel of citizens who make binding decisions.
In practice, a well-prepared protest can reduce your assessed value by 5% to 15%, which translates directly to lower taxes. Many homeowners hire a property tax consultant who works on a contingency basis (typically 25% to 50% of the savings), meaning there is no upfront cost.
What Does the 2% Cap vs 10% Cap Mean Long-Term?
This is where the comparison gets interesting over time.
In California, once you buy, your assessment grows at most 2% annually. In a market appreciating at 5% to 7% per year, the gap between your assessed value and market value widens every year. After 10 years, you could be paying taxes on a value that is 30% to 40% below market.
In Texas, the 10% annual cap on appraised value means your taxable value can grow faster than California's 2% limit, but it still grows more slowly than the market. After 10 years of 5% to 7% annual appreciation, your taxable value might be 15% to 25% below market. The protection is less generous but still meaningful.
The critical difference for relocators: when you sell your California home and buy in Texas, you start fresh. The CAD will appraise your new property at its market value as of January 1 of the year of purchase — your recent sale price may be one piece of evidence, but in Texas (a nondisclosure state) the CAD determines market value independently, and the appraised amount can differ from what you paid. Once the homestead cap takes effect, annual increases in appraised value are limited to 10%, protecting you from rapid tax growth going forward. You lose the accumulated Prop 13 benefit of your California home, which is exactly why the total tax picture matters more than the rate alone.
What Are the Key Takeaways for California to Texas Relocators?
- Texas property tax rates are higher than California's, but most relocators pay less in total taxes due to lower home prices, no state income tax, and the $140,000 homestead exemption. A $400,000 home in Boerne with a combined rate of roughly 1.8% generates about $7,200 in annual property tax before exemptions — the $140,000 school district homestead exemption reduces the taxable value for ISD taxes, bringing the actual bill lower. A comparable $1.5 million home in the Bay Area at California's combined rate generates over $16,500 annually.
- File your Texas homestead exemption immediately upon closing. The $140,000 school district exemption is automatic savings you don't want to miss.
- Protest your appraisal every year. The system is designed for you to use it, and a well-prepared protest typically saves 5% to 15% on your assessed value.
- Over-65 homeowners get an additional $60,000 school district exemption (for a total of $200,000) and a school-tax ceiling that caps the dollar amount of school taxes you pay — so if rates rise, your school tax bill stays at the ceiling amount from the year you qualified, adjusted only for qualifying improvements.
- If you're coming from a high-income California household, the state income tax elimination alone can save more than the entire property tax difference.