Texas Vs. California Property Taxes: Which State Hits Your Wallet Harder?

Key Takeaways:

• How Property Taxes Work Across States: Proposition 13 in California caps annual increases, keeping long-term tax bills steady. In contrast, Texas reassesses property values each year, which can lead to larger jumps, especially without a state income tax to offset funding needs.
• Why Bills Vary More Than You’d Expect: Texas applies higher rates to lower-priced homes with yearly reassessments based on market shifts. In California, Prop 13 keeps tax increases minimal until a property sells. Then the assessment resets, often sharply. 
• Living Costs Shift the Balance: California’s everyday expenses tend to be higher. Texas offers broader affordability, though rising home values and yearly reassessments often drive up property tax bills over time.

When it comes to property taxes, few topics spark stronger opinions than the Texas vs. California debate. What might seem like a straightforward comparison between the Lone Star State and the Golden State reveals a maze of local rules and tax laws that surprise homeowners and investors. However, for anyone relocating to Texas from California, the real question is, “Are the savings as clear-cut as they seem, or does the math tell a different story?”

At Texas Tax Protest, we break down the numbers behind “property tax Texas vs California,” so you can make informed choices without the confusion. As home values shift and policies evolve, more property owners are asking how these two powerhouse states truly compare. This guide takes a clear-eyed look at how property taxes work in both states, what that means for your bottom line, and how to identify real opportunities for savings. 

How Property Taxes Work In Texas Vs. California

Texas and California lean heavily on property taxes to fund public services, but the way those taxes are assessed can vary drastically. In Texas, there’s no state-level property tax. Instead, counties, school districts, and other local entities set their rates each year. The amount you owe depends on your appraised value and which services your property contributes to. Without a cap on annual increases, rising home values can push bills higher in a short time.

Meanwhile, California follows a more rigid system shaped by Proposition 13. Property is taxed at 1% of its assessed value, and that value can only rise by up to 2% annually, unless the property sells or transfers ownership. This formula often creates major differences between longtime owners and new buyers, even within the same neighborhood.

Assessment methods also differ. Appraisal districts and assessors use comparable sales as a baseline but make adjustments based on features like square footage, age, and upgrades. A newer roof or finished garage can nudge the value higher. These adjustments influence your final bill and can reveal when a protest may be worth pursuing. 

How Proposition 13 Shapes California Property Taxes

California’s tax rules may look simpler at first glance, but the impact of Proposition 13 runs deep. While Texas reassesses property values often, California uses a tax system that can keep long-time homeowners’ bills frozen in time. That might sound like a good deal, but the ripple effects have changed how people buy, sell, and hold on to property across the state.

Prop 13 Caps Tax Rates And Slows Value Growth

Proposition 13 was passed by voters in 1978 to put a hard limit on how much California property taxes could rise. It sets the property tax rate at 1% of a home’s assessed value, plus a few local charges. Once a home is purchased, the county assessor uses the sale price to lock in the value. From that point forward, the assessed value can only increase by up to 2% each year, no matter how much market prices climb.

This rule helps many homeowners maintain steady, predictable tax bills. According to the National Bureau of Economic Research, that cap remains in place until the property is sold or transferred. For example, a buyer in 1985 might still be taxed on a $200,000 valuation, while a neighbor buying the same floor plan today could be taxed on a $950,000 sale price.

Locked-In Rates Discourage Moving

These long-term tax savings encourage people to stay put. Relocating means giving up a low assessment and taking on a much higher bill. That inertia can limit housing availability, shift neighborhood demographics, and create bottlenecks in fast-moving markets. In practice, Prop 13 makes property tax bills more predictable, but only for those who bought early. First-time buyers, growing families, and new residents often absorb more of the tax load, even when homes are nearly identical.

Texas Takes A Different Route

In contrast, Texas reassesses values regularly based on current market trends. Local appraisal districts use comps and make adjustments for things like square footage, condition, and lot size. That kind of system spreads the tax burden more evenly, but it also leads to bigger year-over-year jumps. For buyers considering a move from California to Texas, the shift can be jarring. 

Why Property Tax Bills Run Higher In Texas Than In California

Texas may offer wide open spaces and zero state income tax, but the tradeoff often shows up in property tax bills. Homeowners across the state pay some of the highest effective rates in the country due to a combination of structural and financial factors that influence how local governments generate revenue.

No Income Tax Shifts The Burden To Property Owners

Unlike California, Texas does not collect a state income tax. That revenue gap must be filled elsewhere, and property taxes play a central role. Local governments use those funds to pay for essential services, including public schools, fire departments, road maintenance, and law enforcement. 

Since income tax isn’t part of the picture, real estate becomes the main source of funding. According to the Tax Foundation, Texas had an average effective property tax rate of 1.36% in 2023, ranking among the highest nationwide.

Local School Districts Set Their Tax Rates

In Texas, each local school district has the authority to determine its property tax rate. These rates vary across cities and counties, which can lead to major differences in how much two similarly valued homes are taxed. Since school funding draws heavily from local taxes, homeowners often carry a large share of the education budget in growing areas.

The more property values rise, the more revenue these districts collect, without needing to increase the actual tax rate. That automatic growth, paired with a lack of strict caps, can leave homeowners surprised by how fast their bills increase.

Annual Appraisals Reflect Market Activity

Texas appraisal districts reassess property values each year based on current sales data. Assessors review comparable homes, then apply adjustments for property-specific traits like lot size, condition, and improvements. A home with an added bedroom or a new roof will likely be valued higher than a neighbor’s model without upgrades.

For instance, a 2,100-square-foot home with updated plumbing and a newer HVAC system may be assessed higher than a 2,000-square-foot home on the same block, even if they were originally built to the same blueprint. These nuances can raise a home’s taxable value quickly, especially in hot markets.

How The Cost Of Living Shapes Homeownership In Texas And California

Property taxes tell part of the story, but daily living expenses also shape how far your money goes in each state. From groceries and gas to mortgage rates and local taxes, the financial landscape varies widely between California and Texas, and those differences often impact how homeowners budget and plan.

Higher Home Prices And Living Expenses In California

California’s cost of living ranks among the highest nationwide. As of 2025, the state’s index reached 137.6, compared to 92.5 in Texas, according to Data Pandas, however, that figure reflects more than housing prices. Energy bills, transportation, food, and healthcare all carry higher price tags in major metro areas like Los Angeles, San Francisco, and San Diego.

For many homebuyers, steep property prices add another layer. A $950,000 home taxed at a lower rate still creates a much heavier mortgage burden than a $400,000 property in Texas. Additionally, California’s state income tax can reduce take-home pay significantly. These overlapping costs place consistent pressure on household budgets, even when tax rates look modest on paper.

Lower Home Prices And No State Income Tax In Texas

In contrast, many Texans benefit from lower housing costs, fewer state-level taxes, and generally more affordable daily expenses. Cities like Houston, San Antonio, and Fort Worth offer broad housing options at prices well below their coastal California counterparts. While Texas homeowners often deal with higher property tax rates, they avoid paying a state income tax, which can make a noticeable difference in monthly finances.

Groceries, transportation, and healthcare typically cost less in Texas. That affordability can offset high tax bills in some cases, though outcomes depend heavily on local conditions, family size, and lifestyle choices. A household earning six figures in Dallas might keep more of their paycheck than one earning the same amount in Sacramento, even if the property taxes are higher.

Final Thoughts

Comparing property taxes in Texas and California reveals more than surface-level numbers. Each state brings its blend of challenges, rules, and financial implications for homeowners. In Texas, higher property tax rates often offset lower home prices, while California’s rate caps can result in unpredictable jumps after a sale or transfer. These differences create important considerations for anyone planning a budget or preparing for a tax protest.

This is where our team at Texas Tax Protest can make a meaningful difference. We turn complex property tax guidelines into straightforward strategies, blending market insight with data-backed assessments. From reviewing your valuation to helping you navigate the protest process, we’re here to bring clarity, confidence, and real savings to your corner of the tax conversation.

Read more: 

• Texas Property Tax Rates Explained: What Every Homeowner Should Know
• Texas Property Tax Rates by City: Where Does Your Area Rank?
• Texas Disaster Declarations and How They Impact Your Property Taxes

Frequently Asked Questions: Texas Vs. California Property Taxes

How does Proposition 13 affect California property taxes?

Proposition 13, passed in 1978, sets strict limits on how much property taxes can increase in California. Under Prop 13, property is generally taxed at 1% of its assessed value, and that value can only rise by up to 2% per year, unless the property changes hands. This system often means long-time homeowners pay significantly less than recent buyers.

Can property taxes in Texas be higher than mortgage payments?

Absolutely. Texas doesn’t have a state income tax, so local governments rely heavily on property taxes for schools, roads, and other services. In fast-growing areas with climbing home values, it’s not uncommon for homeowners to see property tax bills that rival, or even surpass, their monthly mortgage payments.

What are Mello-Roos taxes in California?

Mello-Roos are special taxes levied on properties within certain “community facilities districts” in California, often new neighborhoods. These taxes are usually used to fund new schools, parks, roads, and fire departments. Mello-Roos amounts vary widely but are in addition to standard property taxes and can significantly increase a homeowner’s annual tax bill.

Do Texas and California have homestead exemptions?

Yes, both Texas and California offer homestead exemptions, but they work differently. In Texas, the homestead exemption can reduce your home’s taxable value by at least 40,000 for school districts—sometimes more, depending on the local area. In California, homeowners can deduct 40,000 for school districts, depending on the local area. In both states, eligibility requirements apply, but the savings can be substantial, especially in Texas.

How do local services and schools affect property tax rates in both states?

Local services, especially public schools, are a major factor driving property tax rates. In Texas, local school districts set their rates, which make up a large chunk of your property tax bill. California’s Proposition 13 limits increases, but local governments can still ask voters for additional taxes to fund services and schools. In both states, better-funded schools and services often mean higher property tax rates.

Are there differences in how agricultural land is taxed in Texas vs. California?

Yes, and the differences can be dramatic. In Texas, “ag exemptions” apply to qualifying land used for agriculture, timber, or wildlife management, often resulting in far lower tax rates than standard residential or commercial property. Calculations rely on production value, not market value. California offers similar tax relief under the Williamson Act and other local programs, but eligibility criteria and savings amounts can differ.

Are property taxes deductible on income tax in both states?

Yes, up to a point. Both Texas and California homeowners can deduct property taxes on their federal income tax returns, though the deduction is capped at $10,000 per year for state and local taxes combined (as of 2024). California also allows itemized deductions for property taxes on state income tax returns, while Texas doesn’t have a state income tax. Keeping detailed records is key when tax time comes around.

Sources:

1. https://taxfoundation.org/data/all/state/property-taxes-by-state-county/ 
2. https://www.datapandas.org/ranking/cost-of-living-by-state 
3. https://www.nber.org/digest/apr05/lock-effect-californias-proposition-13