Texas property tax accounting starts with one fact: Texas has no state property tax. Every dollar goes to local governments, so a single commercial building can owe tax to a school district, a county, a city and several special districts at once, each setting its own rate against the same January 1 value. For a business, the work splits into three jobs: getting the value right, filing on time, and recording the expense correctly on the books.
The rules also moved in 2025. Texas voters approved a larger homestead exemption, a much larger business personal property exemption that starts with the 2026 tax year, and the temporary 20% appraisal cap on commercial property is in its last year. The sections below cover the system, the 2026 calendar and the journal entries.
Four groups handle every Texas property tax bill. They work independently, which is why deadlines and contacts differ by county.
| Who | What they do | Key date |
|---|---|---|
| County appraisal district (CAD) | Values all taxable property at market value as of January 1, processes exemptions and renditions | Notices of appraised value go out in spring |
| Appraisal review board (ARB) | Independent citizen panel that hears protests of CAD values | Hearings usually run late spring through summer |
| Taxing units (school districts, counties, cities, special districts) | Adopt budgets and set their own tax rates | Rates adopted in late summer and early fall |
| Tax assessor-collector | Calculates bills, collects payments, distributes funds to each taxing unit | Bills mailed in the fall, due January 31 |
The Texas Comptroller does not set rates or collect property tax. It publishes forms and guidance, runs the binding arbitration program and studies appraisal district values. Because there is no state income tax, Texas leans heavily on local property tax, which is why it rarely appears on lists of the lowest property tax states.
Rates are stated per $100 of taxable value. Take a commercial building appraised at $1,200,000 with these illustrative rates:
| Taxing unit | Rate per $100 | Tax |
|---|---|---|
| Independent school district | $0.9500 | $11,400 |
| County | $0.3800 | $4,560 |
| City | $0.5500 | $6,600 |
| Hospital, college and utility districts | $0.2000 | $2,400 |
| Total | $2.0800 | $24,960 |
A 10% drop in appraised value through a protest cuts every line by 10%, which is why value disputes usually matter more than rate disputes for a single taxpayer.
After the CAD certifies the appraisal roll (generally by July 25), each taxing unit calculates two rates. The no-new-revenue rate would raise the same tax from the same properties as last year. The voter-approval rate is the ceiling: for most taxing units it allows maintenance and operations revenue to grow 3.5%, while special taxing units such as hospital and junior college districts use an 8% factor, per the Comptroller's tax rate calculation worksheet. A unit that adopts a rate above its voter-approval rate must hold an automatic election. The old petition-based "rollback" election that some articles still describe was replaced in 2019.
| Date | Event | What to do |
|---|---|---|
| January 1 | Valuation and ownership date for the 2026 tax year | Snapshot fixed assets and inventory by location |
| January 31 | 2025 tax bills due | Pay or confirm escrow paid |
| February 1 | Unpaid 2025 taxes become delinquent | Penalty and interest start |
| April 15 | Business personal property rendition due | File, or request the extension in writing |
| Before May 1 | Most exemption applications due | File new homestead or other exemption forms |
| April to May | Notices of appraised value mailed | Review value against your own records |
| May 15 (or 30 days after the notice, if later) | Protest deadline | File protest with the ARB |
| May 15 | Extended rendition deadline | Final date if the extension was granted |
| July 25 | Appraisal roll certified | Taxing units start rate calculations |
| August to September | Rates adopted | Update your accrual estimate |
| October onward | 2026 bills mailed | True up the accrual |
| January 31, 2027 | 2026 taxes due | Pay |
Late payment is expensive. According to the Comptroller's payment guidance, a 6% penalty and 1% interest attach on February 1, the penalty rises 1% a month to 12% by July 1, interest keeps running at 1% a month, and delinquent accounts sent to a collection attorney can pick up a further charge of up to 20%. A $24,960 bill paid on July 1 would carry a 12% penalty ($2,995) and six months of interest at 1% ($1,498) before any attorney fee.
The 89th Legislature passed several changes that voters approved on November 4, 2025:
The circuit breaker expiry deserves a planning conversation now. A building whose capped value is well below market could see a large one-year jump in its 2027 appraisal. Budget for it and gather income and expense data early, because the protest window after the 2027 notice is short.
Business personal property (BPP) covers furniture, fixtures, machinery, equipment, computers, vehicles used for income and inventory you own on January 1. Each county's CAD expects a rendition by April 15 listing those assets by location with cost and acquisition year. A written request filed by April 15 extends the deadline to May 15. Under Tax Code Section 22.28, a late or missing rendition adds a 10% penalty to the tax on that property.
The $125,000 exemption changes the math for small businesses. Consider a Houston restaurant group with three locations in the same taxing units:
| Location | CAD-appraised BPP | Exemption | Taxable BPP |
|---|---|---|---|
| Store A | $90,000 | $90,000 | $0 |
| Store B | $210,000 | $125,000 | $85,000 |
| Store C | $160,000 | $125,000 | $35,000 |
| Total | $460,000 | $340,000 | $120,000 |
Under the old rules all $460,000 was taxable. At a $2.08 combined rate, the taxable amount falls from $460,000 to $120,000, saving about $7,072 a year. Store A can file a short statement certifying that its property is worth no more than the exemption instead of a full rendition. Related businesses at the same address are aggregated, so splitting equipment between two entities in one building does not double the exemption.
Clean fixed asset records make renditions easy to file and defend. Keep a register by physical location with cost, in-service date and disposal date. CADs apply their own depreciation schedules, so the rendition value will rarely match book value or the tax basis you use under IRS Publication 946 depreciation rules. Write off disposed assets promptly, since equipment still on the register is often still being taxed. Inventory held for export may qualify for the freeport exemption if it leaves Texas within 175 days. Confirm the freeport application deadline with your appraisal district when you file the rendition.
Under US GAAP, most companies accrue property tax ratably over the fiscal period of the taxing authority, which in Texas is the calendar tax year. The bill arrives in the fall and is paid by January 31, so a calendar-year business that expenses property tax when paid will understate expenses all year and then post a large January charge. That distorts monthly margins and loan covenant tests. Our explainer on accrual accounting covers the principle.
Using the $24,960 building from earlier, estimated in January from last year's bill:
If a protest later reduces the value, record the refund or reduced liability when the ARB order is final. Multi-location businesses should accrue by location so store-level P&Ls carry their own occupancy cost. Owners of office, retail or industrial buildings can find the wider set of entries in our commercial real estate accounting guide. Landlords who pass taxes to tenants through operating expenses need the same detail for year-end CAM reconciliations.
Property tax on business or rental property is a deductible business expense and is not subject to the SALT cap. For a personal residence, it is an itemized deduction within the state and local tax limit, which the One Big Beautiful Bill Act raised to $40,000 for 2025 with a phase-down above $500,000 of modified AGI, per IRS Topic 503. Cash-method taxpayers deduct property tax when paid. Accrual-method taxpayers have timing options, including a ratable accrual election, that their CPA should confirm. Companies with property in other states face different calendars and valuation dates, which our multi-state tax compliance guide maps out. Property tax is also separate from the Texas franchise tax on gross margin and from Texas sales and use tax, and each runs on its own calendar.
Any owner can protest a value, an exemption denial or an unequal appraisal by the May 15 deadline at no cost. For commercial property, the strongest evidence is usually your own operating data: rent rolls, vacancy history and actual expenses supporting an income-approach value. That package is only as credible as the financial statements behind it, so close the prior year before the hearing. Our step-by-step property tax appeal guide covers the hearing itself, and property tax appeal accounting covers building the financial package.
If the ARB rules against you, you have two routes. You can file suit in district court, or request regular binding arbitration through the Comptroller's arbitration program within 60 days of receiving the ARB order. Arbitration is available when the ARB-determined value is $5 million or less (residence homesteads have no limit), taxes are paid on time, and no lawsuit has been filed on the same matter.
Yes, unless the appraisal district has told you otherwise. Owners whose property at a location is worth $125,000 or less can file a statement certifying that instead of a full asset listing. Above that, the full rendition is still required by April 15.
The tax bill goes to the January 1 owner, but purchase contracts normally prorate the year's tax between buyer and seller at closing. Because the final bill is unknown at a spring or summer closing, the proration is based on an estimate and may need a later adjustment between the parties.
Multiply your expected appraised value, less exemptions, by the combined rate per $100 from last year's bill. Then adjust for known changes, such as the 2027 end of the 20% circuit breaker or a planned expansion that adds equipment on January 1.
Some collectors offer installment agreements of up to 36 months for delinquent taxes, but offering them is optional except for residence homesteads. Penalty and interest still accrue, and signing the agreement admits the tax is owed.
Only when it resolves. Keep accruing the billed amount until the ARB order or arbitration award is final, then record the reduction as a change in estimate in that period.
Texas property tax accounting rewards businesses that keep location-level asset registers and a monthly accrual, and penalizes those that wait for the October bill. If you need help with renditions, the 2027 circuit breaker exposure or property tax accruals across multiple Texas locations, contact Madras Accountancy. Owners in North Texas can also look at our Dallas fractional CFO services for ongoing budgeting support.
The section 4960 excise tax is 21% of nonprofit pay over $1M. From 2026 it covers all employees. See the medical carve-outs, Form 4720 and a worked example.
The paid family and medical leave tax credit is permanent from 2026. See the 12.5% to 25% rates, the premium option, the 6-month rule and how Form 8994 works.
Opportunity zones become permanent in 2027 under the One Big Beautiful Bill. See the new deferral, rural bonus, and the 2026 handoff.
