Understanding Property Taxes in Texas — A Dallas Realtor’s Guide

If you’re buying or selling a home in the Dallas metro area, one of the big costs (and often overlooked ones) is property tax. As your local guide, I want to walk you through what property taxes are, how they’re calculated, what they mean for you and what you should watch out for.

What are property taxes?

Simply put: when you own a home (or other real estate) in Texas, you’re taxed each year by local government entities based on the value of your property. These taxes pay for things like schools, roads, police/fire services, libraries, local government operations, etc.

Important to know:

• Texas has no state-level property tax. The tax is levied locally by counties, cities, school districts and other “taxing units.” 

• Because it’s local, your tax rate can vary significantly depending on which city, school district, special district (like a hospital or utility district) you’re in. 

How are the taxes calculated?

There are two major pieces: the appraised value of your property and the tax rate(s) applied to it.

1. Appraised value (value of your property):

   • Each year (as of January 1) your property is appraised at its “fair market value” for tax purposes. 

   • The local county appraisal district (in Dallas that would be the Dallas County Appraisal District or corresponding CAD) handles this. The value must be “equal and uniform” — meaning similar properties should be treated similarly.

   • If you disagree with the appraised value you can protest it. That’s important especially in rising markets. 

2. Tax rate(s):

   • After appraisal, each local taxing unit sets a rate (often expressed as dollars per $100 of taxable value, or as a percentage of the value) that they need to raise to fund their budget. 

   • Your total tax bill is essentially: (Appraised Value – Exemptions) × All Applicable Tax Rates. 

   • In North Texas, including the Dallas-area, a rough estimate for combined effective tax rates is often 2.1% to 2.8% of home value (depending on location, school district, special districts, etc.). 

What does this mean for you in Dallas?

• For buyers: When you’re budgeting for a home in Dallas, don’t just look at purchase price. Add in the annual tax load (and potential increases). That might affect your affordability.

• For sellers: Prospective buyers will be looking at the tax burden. If your home is in a zone with a higher rate (or special district), you’ll want to make buyers aware so they understand the full cost.

• For both: Because values in Dallas have been moving, appraisal values can rise, which can push your tax bill up even if the tax rate stays the same. And when new developments / school bonds / special districts are added, tax rates can increase.

What are the common exemptions or ways to reduce what you owe?

Here are some of the most relevant ones in Texas/Dallas:

• Homestead exemption: If the property is your primary residence, you can apply for a homestead exemption which reduces the taxable value of your home. This is a big deal. 

• Age 65 / disabled exemptions: If you’re age 65 or older, or disabled, there may be additional tax relief available. 

• Protesting the appraisal: If your appraised value seems high compared to similar homes in your neighborhood, you have the right to appeal and potentially lower your taxable value. 

Five quick tax tips I share with clients

Here are quick practical items you can use and share:

1. Check your tax bill: Look at last year’s tax and compare per-square‐foot, rate, etc. Especially when you’re buying, ask for the actual tax amount from the seller.

2. Budget for increases: Even if your rate stays steady, your appraised value may go up — meaning tax goes up.

3. Understand special districts: Some Dallas-area neighborhoods are in extra taxing zones (MUDs, utility districts) which may add to the rate.

4. File for exemptions ASAP: Many exemptions (like homestead) must be filed by certain deadlines (often around April). If you forget, you might miss the full benefit.

5. When selling, highlight the numbers: If your home has an attractive effective tax rate (compared to similar homes nearby), call that out. Buyers often look at “total cost of ownership,” not just price.

Why this matters for your home-ownership or investment strategy

Property taxes are not just a line item on your bill — they influence long-term value, cash flow (for rental properties), resale appeal, and neighborhood comparisons.

• From a buyer’s perspective, a lower tax burden can mean more flexibility with price or upgrades.

• From a seller’s perspective, a manageable tax bill can be a selling point — “low tax yet great location.”

• From an investment property perspective, especially in Dallas, you’ll want to factor tax rate into the cap rate/ROI calculation. A home in a high-tax district may still appreciate more, but you’ll want to know the cost side.

FAQ — Your top questions answered

Q: Do I owe property tax to the state of Texas?
A: No — you pay to local jurisdictions, not to the state. Texas does not impose a statewide property tax. 

Q: When is my home value assessed?
A: As of January 1 each year your property value is determined for that tax year. 

Q: Can my tax rate change even if my home value stays the same?
A: Yes. The taxing units can adopt new rates or new districts may be added which affect the total rate. Also, your rate might stay the same but your value goes up, meaning you pay more overall.

Q: If I’m buying a home how do I estimate the tax?
A: Ask the seller for the prior year’s tax bill. Then check the appraised value and rate. For rough estimates in North Texas you might use ~2.3% of the purchase price as a ballpark, but it depends heavily on location. 

Q: What if my appraised value seems too high?
A: File a protest with your county appraisal district. You’ll want comps of similar homes, understanding of how features differ, and know your rights. The value has to be equal and uniform. 

Final thoughts

Whether you’re buying, selling, or investing in Texas real estate, knowing how taxes are calculated and what your actual annual cost will be is a must.

If you ever want me to pull the tax rate for a specific address, estimate the tax based on purchase price + neighborhood, or compare tax burdens between two similar homes, I’ve got you. With the right numbers in hand, you’ll make smarter decisions and avoid surprises.

Here’s to making informed, confident moves in Dallas real estate! 
—Christi Weinstein