Jessica Martinsen · Austin Real Estate
Property taxes and insurance in Austin: how the two big carrying costs actually work
How Austin-area property taxes are set, what the homestead exemption changes, how to protest an appraisal, and what drives Central Texas insurance pricing.
Texas has no state income tax, and property tax is where that bill comes due. An Austin-area home is taxed by a stack of separate entities - the school district is usually the largest line, then the county, the city if you are inside one, Austin Community College, and in Travis County a healthcare district. Combined rates commonly land somewhere around 2% of assessed value, but the exact stack depends on the parcel, which is why two similar houses a mile apart can carry meaningfully different bills. The county appraisal district website lists every entity taxing a specific address.
The homestead exemption is the single most valuable piece of paper a Texas homeowner files, and it is free. On a primary residence it removes $100,000 of assessed value from school-district taxes and caps the growth of your assessed value at 10% per year no matter what the market does. Homeowners over 65 and disabled homeowners get an additional exemption and a school-tax ceiling on top of that. File it with the county appraisal district after closing; there is no reason to pay a service to do it.
Assessed value is not a fixed fact - it is an opinion you are allowed to argue with. Appraisal notices go out in spring, and the protest deadline is May 15 or 30 days after your notice, whichever is later. The process runs from an informal review with an appraiser to a formal hearing before the Appraisal Review Board, and evidence is ordinary: closed sales of comparable homes, repair estimates, photos of condition problems. Many Austin owners protest every single year as routine maintenance on their largest bill, either themselves or through a firm that takes a cut of the savings.
In newer suburbs, look for three extra letters before you fall in love: MUD, PID, or WCID. Municipal utility districts and public improvement districts financed the neighborhood's infrastructure, and they repay it through an additional tax or assessment on top of the normal stack - sometimes an extra 0.3 to 1.0 percentage point for a decade or more. Sellers must disclose them, the rate declines as the district pays down its bonds, and the difference between two master-planned communities can be a few thousand dollars a year for otherwise identical houses.
Insurance is the other carrying cost people underestimate. Central Texas pricing is driven by hail and wind - roof age and material move premiums more than almost anything else - and by wildfire exposure in the western hills. Standard homeowners policies exclude flood entirely: that is a separate policy through the National Flood Insurance Program or a private carrier, and lenders require it in mapped high-risk zones. Quote insurance during your option period, not after, because an address with a 15-year-old roof, prior claims, or a flood-zone designation can change the real monthly cost of the house.
Common questions
- What is the total property tax rate in the Austin area?
- It varies by parcel because each address is taxed by its own stack of entities, but combined rates commonly land around 2% of assessed value. The county appraisal district site lists the exact entities and current rates for any address - check the parcel, not the city average.
- Is the homestead exemption worth filing?
- Yes, and it is free. It removes $100,000 of assessed value from school taxes on a primary residence, caps assessed-value growth at 10% a year, and adds further relief at 65 or with a disability. File once with the appraisal district after closing.
- How do I protest my property appraisal?
- File by May 15 or within 30 days of your appraisal notice. Bring comparable closed sales, repair bids, and condition photos to the informal review; if unresolved, present the same evidence to the Appraisal Review Board. Many owners protest annually.
- Why is flood insurance separate?
- Homeowners policies exclude flood damage. Flood coverage is a distinct policy through the NFIP or a private carrier, required by lenders in mapped high-risk zones and worth pricing anywhere near Central Texas creeks, which flood aggressively.
- What is a MUD tax?
- A municipal utility district repays the bonds that built a neighborhood's water and roads through an added tax on homes inside it, often several tenths of a percent or more. It is disclosed at sale and declines as bonds retire - ask for the current rate and remaining term.
This page is a planning guide, not a market report. Confirm current prices, taxes, insurance and property facts against authoritative sources before acting on them.