Allen Brothers Houston Real Estate

Overall Tax Burdens are Lower in Texas, Despite Higher Property Taxes

February 14th, 2011 8:52 PM by AllenBrothers Realtors

Summary of a January 2011 Tierra Grande article

Texas' property tax is one of the highest in the country, often discouraging people from moving here from other states. But overall tax burden in Texas often ranks below national averages, after state and national sales and income taxes are factored in. Texas is even in the bottom ten, according to DC's chief financial officer.

Every year in DC a report comparing taxation in each state's largest city is compiled. It factors in numerous variables. A family of three is assumed. Even homestead exemptions are taken into consideration.

The report contains effective tax rates for every city in the study; this amounts to the percentage of actual market value that must be paid to both state and local governments.

After tax rates are adjusted for percentage of assessed market value (some states set the value at 50% of this value), Houston ranks 4th in the nation at $2.52 per $100 of value. Indianapolis ranks first at $2.92 per $100.

Rates are only part of what determines overall tax burden, however. Exemptions, "circuit breakers" and other things factor in. After a homestead exemption of $25,000 is factored into a $100,000 home's property taxes, the effective rate becomes $1.13 per $100 as opposed to $1.50 per $100.

The DC study factors in all the exemptions and credits a family of three could possibly claim before estimating the amount of tax paid. In Houston, a family of three earning $100,000 per year is shown to pay $5,357 in 2008, ranking Texas 44th; a tax burden of 5.4 percent.

Houston consistently ranks in the bottom ten for total taxation except for the lowest paid income level, which still ranks 36th out of 50. Texas property tax rates may be steep, but overall tax burdens are generally low by comparison.

Posted in:General
Posted by AllenBrothers Realtors on February 14th, 2011 8:52 PM


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