Applying these four simple formulas can help explain year-to-year changes to your property tax bill.

Four Ways Your Tax Rates Change for Better or Worse

I’ve seen some questions about what it might mean when you read about a “tax cut” in connection with your property taxes. While these discussions can get pretty esoteric, applying four simple formulas can help explain year-to-year changes to your tax bill.

These explanations should give you an idea of how an individual taxing entity (county, city, ISD, or college) comes to a decision about raising, lowering, or keeping rates the same.

Assuming an overall increase in property values, here are the possibilities:

1. Tax rate increase

This happens when your property value increases AND your tax rate increases at the same time. The taxing entity collects a higher percentage of that higher appraised value. This collects the most tax dollars overall.

Everyone understands that this is a tax increase.

2. Tax rate steady

This is an increase in the amount paid in taxes because of higher property value. Under this scenario, the rate stays the same, but your property increases in appraised value.

Remember—The tax rate and the tax dollar amount that you pay are different elements of your taxes.

This is how politicians try to get away with saying they have not increased your taxes, even though the amount you see on your tax bill goes up. A variation of this scenario is a slightly lower tax rate that still collects more dollars.

This scenario collects more tax dollars overall.

3. Effective tax rate

The state legislature defines “effective tax rate” as the artificial rate that brings in the same dollar amount in the aggregate from existing properties. At the same time, the county collects additional tax dollars from new construction value over and above the existing property amount.

One can truly say that this is not a tax increase on individuals, but it does increase available resources for the county.

This scenario collects more tax dollars overall.

4. Revenue-neutral tax rate

If the county decided to collect the exact dollar amount as the year before, including all properties (existing and new construction), the tax rate would decline by a large percentage—especially in a fast-growth county like ours.

In this scenario, the county would collect the same dollars overall in the aggregate, while individual property owners would see a dramatic decrease.


This year, Collin County proposes #3: The Effective Tax Rate.

Assuming the Commissioners Court proposal passes muster with the public, we will collect the same dollars from all existing real property. New construction will pay a little more, helping to keep your tax bill in check.

While your actual tax dollar amount may vary slightly from last year’s bill (depending on your individual appraisal), the county will collect the same overall amount from all existing properties as last year. The difference on your bill will be tiny.

Keep in mind—

This only applies to the part of your bill determined by Collin County government. The portion of your tax bill that goes to your city, ISD, or college may fall into any one of the above four categories.

So the county’s portion of you bill won’t change much from last year’s, despite a big increase in the appraised value of your home. And that’s thanks the new construction that has come as a result of our county’s economic growth.