Texas Vs California: Which State Has Higher Property Taxes?

Key Takeaways: 

• Rate vs. Value: Texas has higher property tax rates, but California homeowners may pay more in raw dollars due to elevated home prices.
• Tax Stability: California’s Prop 13 offers long-term tax stability, while Texas properties can see annual increases tied to market value.
• Expert Assistance: Professional help, like ICON Property Tax, can save you money by appealing inaccurate valuations—especially in Texas.

When it comes to property taxes, Texas and California sit on opposite ends of the spectrum in more ways than one. These two powerhouse states boast strong economies and large populations, but their approach to property taxation could not be more different. In Texas, high property tax rates compensate for the absence of a state income tax. In contrast, California’s rules are built around Proposition 13, which caps property tax growth but creates equity issues over time. For homeowners and investors, the differences are more than legal quirks—they’re real dollars that affect affordability, investment strategy, and long-term financial planning.

At ICON Property Tax, we’ve helped Texas property owners reduce millions in overassessed property taxes—earning the trust of thousands of homeowners, investors, and commercial property stakeholders. With deep expertise in tax protests, market valuations, and navigating local tax codes, we know exactly where property owners lose money—and how to help them keep it.

In this piece, we’ll explore how property taxes differ between Texas and California, uncover which state truly costs more, and help you make informed decisions about where—and how—you pay.

How Property Taxes Are Calculated

Property taxes are typically based on two key components: the assessed value of the property and the tax rate set by local authorities. While this formula is simple on the surface, how each state assesses value and sets rates varies significantly.

Assessed Value

This is the value assigned to your property by the local government for tax purposes. It may or may not reflect the actual market value. States use different methods and frequencies to reassess property values, which directly impact your tax bill.

Tax Rate

The tax rate is usually expressed as a percentage or a decimal (known as the mill rate). Local taxing entities such as counties, school districts, and municipalities combine their individual rates to determine your total property tax rate.

Local Control

In both Texas and California, local governments have significant authority over property tax rates. However, the way this control is structured—and the limits imposed by state laws—create very different outcomes for taxpayers in each state.

Texas Property Taxes: What You Need To Know

Texas is known for having no state income tax, which is often a major draw for residents and businesses. However, that lost revenue has to come from somewhere, and in Texas, property taxes pick up the slack.

High Rates, Local Control

Texas has some of the highest property tax rates in the country. Rates can vary widely from one county to another, since they are primarily determined by local taxing entities such as school districts, counties, and cities. This decentralized approach can lead to significantly different tax bills even for similar properties in neighboring areas.

Annual Property Assessments

In Texas, properties are assessed annually at their market value by local appraisal districts. This can lead to sudden spikes in tax bills, especially in areas with rapidly appreciating property values.

Exemptions And Protests

Homeowners in Texas can benefit from exemptions such as the homestead exemption, which reduces the taxable value of a primary residence. Additionally, Texas allows property owners to protest their property assessments, and many turn to experts like ICON Property Tax to help reduce overvalued assessments and lower their tax burden.

California Property Taxes: What You Need To Know

California’s property tax system is shaped largely by Proposition 13, a law passed in 1978 that still defines how taxes are calculated today. While the state has relatively low property tax rates, the rules surrounding them create a very different landscape compared to Texas.

Proposition 13 And Tax Limits

Under Prop 13, property taxes in California are based on the purchase price of the property, not its current market value. The assessed value can only increase by a maximum of 2% per year, unless there is a change in ownership or new construction. This provides long-term homeowners with predictable and often lower property taxes.

Uniform Statewide Rate

California applies a base property tax rate of 1% of the assessed value, with additional voter-approved local taxes and assessments layered on top. Even with these extras, California’s effective property tax rates tend to be lower than those in Texas.

Stability, But Less Flexibility

While Prop 13 benefits homeowners by limiting increases, it can also lead to inequities—neighbors in similar homes may pay vastly different taxes based solely on when they bought their property. Investors and new buyers often end up with higher tax bills than long-time residents.

Texas Vs California: Which State Pays More?

When comparing Texas and California, the answer to “Which state has higher property taxes?” depends on how you measure it—by rate, amount paid, or long-term cost.

By Property Tax Rate

Texas consistently ranks among the top five states with the highest effective property tax rates, often exceeding 1.6% to 2.3%, depending on the county. California, in contrast, maintains a base rate of 1%, with total rates rarely going much higher than 1.25% in most areas.

By Dollar Amount Paid

Because home values in California are generally higher, especially in areas like San Francisco or Los Angeles, homeowners can end up paying more in raw dollars, even if the rate is lower. For example, 1% of a $1.5 million home in California can easily outpace 2% of a $400,000 home in Texas.

By Long-Term Impact

Due to Prop 13 in California, long-term homeowners often enjoy stable and predictable tax bills, while Texas homeowners may face annual increases tied to market value. However, newcomers to California may be hit with high taxes based on today’s inflated property prices.

Why The Difference Matters To Homeowners And Investors

The differences in property tax structures between Texas and California aren’t just academic—they can significantly affect your financial planning, whether you’re buying your first home or expanding an investment portfolio.

For Homeowners

In Texas, high annual tax bills can add up quickly, even with a more affordable home price. Budgeting for escalating property taxes is essential, especially in fast-growing areas. On the other hand, California’s predictable tax environment gives long-term homeowners peace of mind, but new buyers might feel the sting of high entry costs.

For Real Estate Investors

Investors often find Texas appealing due to lower home prices and strong rental demand, but high taxes can reduce the overall return on investment (ROI). In contrast, California offers potential for appreciation and tax predictability, but the initial cost of entry is steep, and margins may be thinner due to higher property prices.

Strategic Planning Is Key

Whether you’re settling into a home or managing a portfolio, understanding local tax dynamics can help you make smarter moves. That’s where companies like ICON Property Tax come in—they help homeowners and investors navigate complex tax structures and appeal assessments that may be too high.

Get Help With Your Property Taxes

Navigating property taxes—whether in Texas or California—can be complex, especially when tax bills seem higher than expected or assessment values don’t align with the market. Fortunately, you don’t have to go it alone.

Why Professional Help Matters

Property tax systems are full of nuances. From understanding local tax rates to filing appeals and claiming exemptions, small mistakes can cost homeowners and investors thousands of dollars over time. Professional services ensure you’re not overpaying and that all available reductions are applied correctly.

How ICON Property Tax Can Help

ICON Property Tax specializes in helping Texas property owners lower their tax bills through expert appeals and guidance. Whether you’re disputing an unfair assessment or looking to optimize your property tax strategy, ICON brings the experience and local insight needed to get results.

Final Thoughts

When it comes to property taxes, there’s no one-size-fits-all answer. Texas and California offer very different systems, each with unique advantages and challenges.

Texas has no state income tax but makes up for it with high property tax rates and frequent reassessments. California offers lower rates and long-term stability, but high property values can still mean large tax bills, especially for new buyers.

Whether you’re buying a home, relocating, or building an investment portfolio, understanding how each state handles property taxes can help you plan more effectively. And if you’re in Texas, partnering with a team like ICON Property Tax could make a measurable difference in how much you pay each year.

In the end, the best choice depends on your financial goals, lifestyle, and long-term plans. Know the numbers, consider the trade-offs, and make the decision that fits you best.

Frequently Asked Questions About Which State Has Higher Property Taxes

What causes the differences in property tax systems between Texas and California?

The differences stem largely from how each state structures its revenue model. Texas relies heavily on property taxes due to its lack of a state income tax, while California’s property tax system is shaped by Proposition 13, which limits assessment increases and prioritizes stability over rate flexibility.

Do property taxes affect home insurance costs in either state?

While property taxes and home insurance are separate expenses, areas with higher property taxes can sometimes correlate with higher home insurance premiums, especially in disaster-prone regions. However, the link is indirect and varies by location and insurer.

Can seniors get property tax relief in Texas or California?

Yes. Both states offer property tax relief programs for seniors. Texas allows tax deferrals for homeowners aged 65+, while California offers programs like the Property Tax Postponement Program. These programs can vary at the local level.

Are rental properties taxed differently from owner-occupied homes in either state?

Not directly. Both states generally tax properties the same regardless of use, but owner-occupied homes may qualify for exemptions, like the homestead exemption in Texas, which do not apply to rental properties.

Do businesses pay property taxes at the same rate as homeowners?

In Texas, businesses and residential properties are typically taxed similarly, based on assessed value. In California, commercial properties can also benefit from Prop 13, but there are ongoing efforts to change this, such as the proposed “split roll” reforms.

How often can property taxes change in each state?

In Texas, property values are reassessed annually, meaning tax bills can change every year. In California, due to Prop 13, reassessment only occurs when a property is sold or undergoes major improvements, resulting in less frequent changes.

Is it easier to appeal property tax assessments in Texas or California?

Texas offers a relatively accessible appeal process, and many homeowners use services like ICON Property Tax to navigate it. California also allows appeals, but the timeline is tighter and varies more between counties, making the process less standardized.

How do school district taxes impact property taxes in both states?

In both states, school districts form a major portion of your property tax bill. In Texas, they can account for more than half of the total tax. California’s school funding is less reliant on local taxes due to the state’s centralized education funding system.

Do new homeowners in California face higher property taxes than longtime owners?

Yes. Under Prop 13, property taxes are based on the purchase price. So new homeowners often pay significantly more than neighbors who bought decades ago, even if the properties are similar in value today.

Are there caps on how much property taxes can increase annually?

California has a hard cap of 2% per year (thanks to Prop 13), while Texas does not have a fixed percentage cap. However, Texas recently passed laws requiring voter approval if local tax revenue increases exceed certain thresholds.