Most Texas Homeowners Overpay Property Taxes. Here’s How to Fix It.

How Texas Homeowners Can Legally Lower Their Property Taxes

For many homeowners in Texas, one of the biggest drivers of their monthly housing payment isn’t their mortgage rate, it’s their property taxes.

And in a fast-growing market like Dallas–Fort Worth, those taxes can increase quickly as home values rise.

What many homeowners don’t realize is that there are legal and simple ways to reduce what you pay in property taxes. Understanding how your property value is determined,  and how the system works, can save you hundreds or even thousands of dollars over time.

If your home is worth between $400K and $900K, even small adjustments to your property value can make a meaningful difference in your annual tax bill and monthly escrow payment.
Regardless of your home’s value, it’s important to review and consider protesting your valuation each year to maximize savings and avoid unnecessary increases.

Let’s walk through how it works.

How Property Taxes Are Determined in Texas

Each year, your county appraisal district estimates your home’s value, known as the appraised value, which determines how much property tax you pay. (Some counties reassess every two years, so it’s important to verify with your local county.)

If the county determines your home value has increased, your taxable value increases as well, which means higher property taxes.

This can happen even if your home wouldn’t realistically sell for that price, as the county’s assessment is what ultimately determines your tax bill.

Because most homeowners pay property taxes through their escrow account, this increase can directly impact your monthly mortgage payment.

Even if your interest rate hasn’t changed, your payment can still rise simply because your tax assessment went up.

The 10% Homestead Cap (And Why It Matters)

Texas offers a major protection for primary residences called the Homestead Exemption.

If you have a homestead exemption on your home, your taxable value can only increase by up to 10% per year.

That sounds helpful, and it is,  but there’s an important detail many homeowners miss:

That 10% increase compounds every year based on the previous value.

If you never challenge the county’s valuation, the number they use continues to grow year after year, which means your tax bill grows with it.

If you don’t currently have a homestead exemption in place, it’s important to apply as soon as possible through your county appraisal district. In many cases, it can be applied retroactively for up to two years, otherwise, your taxable value could increase beyond the 10% annual cap.

Example: How a Property Tax Protest Saves Money

Let’s say your home was valued last year at:

$400,000

The county increases the value by the full 10%.

Your new taxable value becomes:

$440,000

If your property tax rate is around 2%, your annual property taxes would be roughly:

$8,800

(This is a simplified example. Your actual tax bill may be lower depending on exemptions such as homestead, over-65, or veteran status.)

Now let’s say you review the valuation and decide to challenge it.

After submitting a protest and providing evidence, the county agrees to reduce the value to:

$415,000

Now your tax bill becomes:

About $8,300

That’s roughly $500 saved in one year.

But the real benefit comes next year.

Because the next increase is based on $415,000 instead of $440,000, that difference continues to compound over time.

This is why challenging your appraisal can create long-term savings, not just a one-year reduction.

How to Protest Your Property Taxes in Texas

The process of challenging your property value is simpler than many homeowners think.

First, you’ll receive a Notice of Appraised Value from your county appraisal district, usually in the spring.

There is a set protest window each year, typically beginning in April, during which homeowners can challenge their appraised value.

If the value appears too high, you can file a protest online through your local appraisal district.

In some cases, homeowners are able to resolve this quickly through an initial review — sometimes without even needing a formal hearing.

During this initial review, the county may present an adjusted value. If you believe there’s still room for improvement, you can submit supporting evidence such as:

• Comparable home sales in your neighborhood
• Photos showing condition or needed repairs
• Independent valuations or market data

Many homeowners resolve their protest during this informal stage. If needed, you can escalate to a formal review board hearing for a final decision.

Other Ways Texas Homeowners Can Reduce Property Taxes

Make Sure You Filed a Homestead Exemption

If your home is your primary residence and you haven’t filed for a homestead exemption, you could be paying more than necessary.

The homestead exemption reduces your taxable value and protects you from large year-to-year increases.

Many homeowners forget to apply after purchasing a home, which can end up costing them thousands over time.

Check for Additional Exemptions

Texas offers additional exemptions depending on eligibility, including:

• Homeowners over age 65
• Disabled homeowners
• Disabled veterans

These exemptions can reduce your taxable value even further and, in some cases, freeze portions of your property taxes.

Review Your Escrow and Mortgage Strategy

Sometimes homeowners notice their monthly payment increase and assume it’s due to interest rates.

But often, the real reason is rising property taxes or insurance costs within the escrow account.

Reviewing your escrow statement can help identify what actually caused the change.

If you successfully lower your property taxes or reduce your insurance costs, you can request an updated escrow analysis from your loan servicer to adjust your monthly payment sooner rather than waiting for the annual recalculation.

Why Smart Mortgage Planning Matters

Many Texas homeowners have built significant equity over the past several years as home values increased across the DFW area.

But equity alone doesn’t automatically lower your housing costs.

A strong mortgage strategy looks at the full picture, including:

• Property taxes
• Insurance costs
• Interest rate structure
• Equity position

Sometimes the best move isn’t refinancing, it’s simply restructuring the loan and tax strategy you already have.

When a Mortgage Checkup Can Help

If you’re a homeowner in the Dallas–Fort Worth area, reviewing your property taxes and mortgage structure could reveal opportunities to reduce your monthly housing costs.

A simple mortgage checkup can help determine:

• Whether your property taxes look reasonable
• If PMI can be removed
• Whether refinancing makes sense
• Opportunities to improve your overall financial position

Property taxes are one of the most overlooked,  yet impactful, parts of homeownership in Texas.

The good news is, you have more control than you think.

Taking the time to review your valuation, apply exemptions, and challenge inaccuracies can lead to real savings both now and in the future.

Work With a Texas Mortgage Broker

I’m Mark, a mortgage broker here in Texas. I help homeowners look at the full picture, not just rates, to find opportunities to save.

If you want a second set of eyes on your situation, request a quick mortgage checkup and I’ll walk you through your options.