Why Your Property Taxes Went Up 10% (Even With the Homestead Cap)

You got your property tax bill. It went up 10%.

But wait — doesn't Texas have a law that caps property tax increases at 10%?

Yes. And your taxes still went up 10%. Or more.

Here's what's actually happening — and why the homestead cap doesn't work the way most Texas homeowners think it does.

What the Homestead Cap Actually Does (And Doesn't Do)

Texas has a 10% homestead cap. It's been law since 1997.

Here's what it says: Your home's assessed value can only increase by 10% per year — but only if you have a homestead exemption on file.

That sounds great. And it is — sort of.

But here's the catch most homeowners miss: The cap applies to your assessed value, not your tax bill.

Your tax bill is calculated by multiplying your assessed value by your tax rate. And the tax rate? That's not capped at 10%.

So even if your assessed value only goes up 10%, your tax bill can go up more — sometimes a lot more.

How Your Property Tax Bill Is Calculated

Let's break down the math so this makes sense.

Your property tax bill = Assessed Value × Tax Rate

Example:

• 2025 Assessed Value: $300,000
• 2025 Tax Rate: 2.0%
• 2025 Tax Bill: $6,000

Now let's say your home's market value jumped to $360,000 in 2026. That's a 20% increase.

But thanks to the 10% homestead cap, your assessed value can only go up 10%:

• 2026 Assessed Value: $330,000 (capped at 10% increase)

Great, right? Your assessed value only went up $30,000 instead of $60,000.

But now let's add in the tax rate. Let's say your local taxing entities (school district, county, city) raised rates to 2.2%:

• 2026 Tax Rate: 2.2%
• 2026 Tax Bill: $330,000 × 2.2% = $7,260

Your tax bill went from $6,000 to $7,260. That's a 21% increase — even though your assessed value was capped at 10%.

This is why homeowners get confused. The cap works. But your bill still goes up.

Why Tax Rates Go Up (And How Much They Can Rise)

Here's the part most people don't realize: tax rates aren't capped at 10%.

In Texas, local taxing entities — school districts, counties, cities, special districts — can raise tax rates based on two factors:

1. Voter-Approval Tax Rate (VATR)

For most taxing entities, rates can increase by up to 3.5% without voter approval. For school districts, the limit is 2.5%.

If they want to raise rates higher than that, they have to hold an election and get voter approval.

But within those limits, they can raise rates every single year.

2. Disaster Declarations

If a county or city declares a disaster (hurricane, flood, tornado), they can raise rates above the voter-approval threshold without an election.

This happened across Texas after Hurricane Harvey, winter storms, and other disasters.

The Compound Effect

Even small rate increases compound over time.

A tax rate that goes from 2.0% to 2.05% to 2.10% to 2.15% over four years doesn't sound dramatic. But combined with a 10% annual increase in assessed value, your tax bill climbs significantly.

Real-World Example: Why Your Bill Jumped

Let's walk through a realistic scenario for a homeowner in Dallas, Houston, or Austin:

Year 1 (2023):

• Assessed Value: $300,000
• Tax Rate: 2.0%
• Tax Bill: $6,000

Year 2 (2024):

• Assessed Value: $330,000 (10% cap applied)
• Tax Rate: 2.05% (school district raised rate)
• Tax Bill: $6,765 (+12.8%)

Year 3 (2025):

• Assessed Value: $363,000 (10% cap applied)
• Tax Rate: 2.08% (city raised rate)
• Tax Bill: $7,550 (+11.6%)

Year 4 (2026):

• Assessed Value: $399,300 (10% cap applied)
• Tax Rate: 2.12% (county raised rate)
• Tax Bill: $8,465 (+12.1%)

Over four years, your tax bill went from $6,000 to $8,465. That's a 41% increase — even though your assessed value was capped at 10% each year.

This is why homeowners feel like the cap doesn't work. It does — but it only controls one variable (assessed value), not the other (tax rate).

What Happens If You Don't Have a Homestead Exemption

Here's a critical detail: the 10% cap only applies if you have a homestead exemption on file.

If you don't have a homestead exemption, there's no cap. Your assessed value can jump 20%, 30%, or more in a single year.

Example:

• Market value jumps from $300,000 to $390,000 (30% increase)
• No homestead exemption = no cap
• Your assessed value goes to $390,000
• Tax Rate: 2.0%
• Tax Bill: $7,800 (up from $6,000 — a 30% increase)

If you haven't filed your homestead exemption, do it now. You're leaving money on the table every year.

In 2026, Texas increased the homestead exemption to $140,000 (up from $100,000). Combined with the 10% cap, this is one of the best protections Texas homeowners have.

Other Reasons Your Tax Bill Went Up

Beyond the assessed value and tax rate, here are other factors that can push your bill higher:

1. You Bought or Improved Your Home

If you bought your home in the last year, the cap doesn't apply yet. Your assessed value resets to the purchase price.

Same if you added a pool, built an addition, or made major improvements. The county reassesses and your value jumps — sometimes above the 10% cap because it's considered a "new" improvement.

2. Your Assessment Is Wrong

Here's the one most homeowners miss: 30-60% of properties are over-assessed.

Counties use mass appraisal systems — computer models that process thousands of properties at once. These systems make mistakes:

• Wrong square footage (often 50-200+ sq ft too high)
• Features you don't have (pool, garage, extra bedroom)
• Outdated comparable sales
• Condition issues not reflected in value
• Unequal appraisal — your home valued higher than similar properties

Even if your assessed value is capped at 10%, if you're starting from an inflated base, you're overpaying every single year.

3. New Taxing Entities Were Added

Sometimes new special districts are created — utility districts, road districts, hospital districts. Each one adds a new tax rate to your bill.

Your assessed value stays the same, but your combined tax rate goes up.

What You Can Do About It

You can't control tax rates. But you can control whether you're overpaying on your assessed value.

Here's your action plan:

1. File Your Homestead Exemption (If You Haven't)

This is non-negotiable. The 10% cap only applies if you have a homestead exemption on file.

File through your county appraisal district. Most counties let you do it online. It takes 10 minutes.

2. Check Your Assessed Value When Your Notice Arrives

Texas counties mail out Notices of Appraised Value in April. When yours arrives, don't ignore it.

Compare your assessed value to:

• Recent sales of similar homes in your neighborhood
• Your neighbors' assessed values (public record — search your county's appraisal district website)
• What your home would actually sell for today

If your assessed value seems too high, you have grounds to protest.

3. File a Protest by May 15

The deadline to file a property tax protest in Texas is May 15 (or 30 days from the date your notice is mailed, whichever is later).

You can file online through your county appraisal district. You don't need evidence to file — just file before the deadline. You can gather evidence later.

80-90% of Texas protests result in some reduction. But only about 5% of homeowners actually file.

4. Let TaxDrop Handle It for You

Most Texas homeowners don't have time to research comps, attend hearings, and negotiate with appraisers.

TaxDrop handles the entire protest process:

• We gather comparable sales and evidence
• We file your protest before the May 15 deadline
• We attend informal reviews and ARB hearings on your behalf
• We negotiate with your county to get the largest possible reduction

We use a no win, no fee model. If we don't reduce your property taxes by at least $500, you pay nothing. If we do, we charge 25% of your first-year savings.

5. Attend Local Budget Hearings

If you want to influence tax rates, show up to local budget hearings. School districts, counties, and cities hold public meetings before setting their rates.

Most residents don't attend. If enough people show up and push back, elected officials listen.

The Bottom Line

The 10% homestead cap works — but it doesn't cap your tax bill.

It caps your assessed value. Your bill is assessed value × tax rate. And tax rates aren't capped at 10%.

That's why your taxes can go up 12%, 15%, or more — even with the homestead cap in place.

What you can control:

• File your homestead exemption (if you haven't)
• Check your assessed value when your notice arrives in April
• Protest if your value is too high (deadline: May 15)
• Make sure you're not starting from an over-assessed base

The cap protects you from runaway assessed values. But if your assessed value is wrong to begin with, you're overpaying — every single year.

Don't leave $500-$1,000+ on the table. Make sure your assessed value is fair.

Ready to reduce your property taxes? Get a free savings estimate at TaxDrop.com in under 2 minutes.