Texas and California share the distinction of being two of the largest and most populous states in the country. However, they differ when it comes to property tax policies. Several factors influence the rate of property tax in Texas vs. California (which has been a hot topic), including the overall tax structure:
Texas property taxes are based on a regressive system in which lower-income earners pay a higher percentage of their overall income in taxes. The state does not collect a state income tax to generate tax revenue, but instead depends heavily on property taxes to fund local governments and local services like schools and roads. As a result, Texas residents pay relatively high property taxes.
California takes a progressive approach to real estate taxes, with the tax rate increasing as income increases. High-income earners and new homebuyers bear a greater percentage of the income tax burden, so that residents across the state enjoy lower California property taxes.
Key Differences at a Glance
Other key differences in the rate of property tax in California versus Texas include how often property reassessments occur, adoption of annual increase caps, the median effective tax rate, and applicable homestead exemptions. Who sets the property tax rates and how much residents pay in sales tax also differ between states. The table below offers a side-by-side comparison of property taxes in Texas vs. California:
Texas | California | |
|---|---|---|
Tax structure | Regressive: Lower-income earners pay a higher percentage of their income in personal property taxes. | Progressive: High and median income earners pay a greater percentage of property tax. |
Reassessment frequency | Annually | Limits reassessments under |
Increase caps | A homestead cap limits annual increases. The capped value is the lesser of the property's fair market value or the previous year’s appraised value, plus an additional 10% increase. | General property taxes are limited to 1% of the assessed property value. Restricts property assessment increases to 2% annually or the state inflation rate, whichever is lower. *Exceptions for property upgrades and new construction. |
Average effective state property tax rate | 1.67% | 1.21% |
Homestead exemptions | $140,000 for qualifying homeowners & additional exemptions for seniors, disabled, and veterans | $7,000 for qualifying homeowners & additional exemptions for seniors, disabled, and veterans |
Tax rate setting entity | Local taxing authorities (counties, cities, school districts) | Local taxing authorities (counties, cities, school districts) |
Sales taxes and rates | Statewide sales tax is 6.25%. Local jurisdiction can impose an additional tax up to 2%. | Statewide sales tax is 7.25%. Six percent goes to the state, and a 1.25% mandatory local tax goes to city and county entities. |
Property tax burden | Fifth-highest ranked state for property taxes. | Sixteenth lowest property tax burden in the U.S. |
How Property Taxes Are Assessed
Property taxes in California vs. Texas differ based on each state's assessment practices, which influence how much residents pay. While there aren't any states without property taxes, some states have passed legislation to tax authorities to address rising property values. These policies aim to give residents relief from high tax bills. California and Texas are strong examples of such states.
California
In 1978, voters in California approved Proposition 13 (Prop 13). Since then, property taxes have been based on the property's value at the time you buy it. The law also sets how much of that value is used to calculate your taxes, keeping it consistent over time.
This is especially beneficial for California residents who have lived at the same property for an extended period, as home prices and tax bills in urban areas of the state have soared. Under Prop 13, tax foundation values are only reassessed if they meet the following criteria:
Ownership changes
New construction or significant property improvements
Market value declines below the factored base year value
State law also established an annual cap on property appraisal increases at 2% per year and limited the general property tax rate to no more than 1% annually. For example, a home assessed at $600,000 would owe $6,000 in property taxes.
Texas
Texas real estate taxes are based on a property's appraised value, which is determined by a tax assessor who looks at factors such as square footage, location, and property conditions. Local government entities like cities, counties, and school districts set tax rates based on their projected budgetary needs for the upcoming year.
A resident's property tax burden is determined by multiplying the appraised property value by the total tax rate (appraised value X tax rate)
County assessors reassess properties annually to reflect current market conditions, and tax rates fluctuate depending on budgetary needs. This can lead to higher homeownership costs and tax bills from one year to the next.
As of 2025, Texas law increased the general homestead exemption by $40,000 from $100,000 to $140,000 to reduce residential tax liability in the state.
Comparing Effective Tax Rates
The effective tax rate or millage rate is the percentage of a property's value that is paid in taxes.
Market value is what a property is worth when sold on the open market
Assessed value is the appraised value of a property minus exemptions or deductions.
Thus, the effective tax rates vary widely, even within the same state, due to fluctuating real estate prices and local and state government leadership.
The table below shows the median effective tax rate for 10 populous cities in Texas and California:
City | |
|---|---|
San Diego, CA | 1.21% |
Fresno, CA | 1.22% |
San Francisco, CA | 1.23% |
Los Angeles, CA | 1.24% |
San Jose, CA | 1.31% |
Houston, TX | 1.41% |
Austin, TX | 1.51% |
Fort Worth, TX | 1.70% |
Dallas, TX | 1.74% |
San Antonio, TX | 2.03% |
Exemptions and Savings Opportunities
Homestead exemptions reduce the taxable value of owner-occupied housing. In addition to the $140,000 general Texas homestead exemption, seniors, veterans, and qualifying Texas residents with a disability can apply for additional exemptions to lower their tax liability further.
California's Proposition 19 was passed in November 2020. It allows seniors and disaster victims the flexibility to transfer the taxable value of their primary residence up to three times. This helps California residents retain a lower, established property tax base if they're forced to move. However, Proposition 19 tightened the rules regarding inherited properties, which are now subject to reassessment if the heirs don't use the property as their primary residence.
The tax experts at Ownwell help you make sense of state exemptions and other savings opportunities. Learn more and view your potential savings.
What This Means for You as a Homeowner or Investor
Take advantage of cost-saving measures like exemptions and tax protest filings to lower your annual property tax bills in California or Texas.
How Ownwell Can Help
We offer free savings estimates and appeals support in both states, as well as a homestead exemption filing service, including retroactive exemptions in Texas. Let the local experts at Ownwell handle the paperwork, and start seeing your savings today.
