Later this week, the Austin City Council is expected to adopt its budget for the coming fiscal year, which includes how it plans to tax property owners. Some institutions that collect property taxes, like the Austin Independent School District, have already adopted their budgets.
If you own property, this will affect how much you owe in taxes at the start of the year. And even if you don’t own a home, this will impact your landlord’s bill, and they could pass off some of those costs to you by increasing your rent.
Welcome to budget (also known as "determining your property tax bill") season.
While elected officials debate tax rates, no-new-revenue tax rates and the like, here’s a list of terms to help you understand what goes into taxing you. You can also check out this website to see a breakdown of what your new property tax bill might look like.
Appraised value: Earlier this year, property owners received a new appraised value from the Travis Central Appraisal District. This is an estimate of how much your home would have sold for on the market if it sold on Jan. 1, 2022.
This year, these values jumped significantly. According to TCAD, the average appraised value of a residential home went up 56%. But if you’ve owned your home for a couple years, this is not the amount you will pay taxes on — that amount is likely much lower.
Homestead exemption: If you live in the home you own and have filed what’s called a homestead exemption with the local appraisal district, you get a tax break from various local entities.
For example, the City of Austin allows people with homestead exemptions to withhold 20% of their taxable value from taxes.
Assessed value (or net appraised value): This is the appraised value when you bought the home (if you still live in it), plus 10% each year — a cap put in place by the state. If you have lived in your home for a couple years and have filed a homestead exemption, this value is likely significantly lower than your appraised value.
Taxable value: This is the value you're taxed on. Between the appraised value and the assessed value, the lowest number becomes your taxable value.
This number can vary by whichever institution is taxing you, because each of them offers certain tax breaks.
Tax rate: This is the rate at which a taxing entity — such as cities, counties and school districts — will collect money from your taxable amount.
Take the Austin Independent School District’s tax rate for the coming fiscal year: $0.9966 per $100 valuation. This means for every $100 of your taxable amount, the school district is collecting about a dollar. So, if your taxable amount is $200,000, you’re paying about $1,993 in property taxes over the next year to the local school district.
No-new-revenue tax rate: This is the tax rate a taxing entity would set to collect the same amount of property tax revenue it did the year before.
Typically, though, entities want to collect more than they did the year before to offset rising costs of services. The state of Texas caps how much new revenue they can collect before needing to hold an election; taxing entities like the City of Austin have to get voter approval if they want to raise the revenue they collect by more than 3.5% over the last year.
Proposed tax rate: This one is pretty straightforward. This is the tax rate a taxing entity is proposing and may end up adopting when officials vote on the budget. Simple enough, right?
Property owners will know for sure by October or November what their new property tax bill will look like. TCAD expects that people who own and live in their homes will likely see a decrease in their bills compared to last year.
