How Will the 2026 Property Tax Increase Impact Home Buying Decisions in Austin?

How Will the 2026 Property Tax Increase Impact Home Buying Decisions in Austin?

Austin’s real estate market has seen significant growth over the past decade, but with that growth comes one major concern for homeowners: rising property taxes.

With the City of Austin and Travis County preparing for reassessments in 2026, projections indicate a 2–3% average property tax increase, depending on location and school district. For homebuyers and investors, this change could impact both monthly affordability and long-term purchasing strategies.

According to Maria Aguirre, a top Realtor® in Austin, “Property taxes in Austin are one of the biggest ongoing costs of homeownership—and understanding how they evolve is crucial before making a buying decision.”

Understanding Austin’s Property Tax Structure

Unlike many U.S. cities, Texas does not have a state income tax. Instead, local governments rely heavily on property taxes to fund public schools, infrastructure, and city services.

In Austin, the average effective property tax rate in 2025 sits around 1.68%, with variations depending on school district and neighborhood.

Under the new 2026 assessment proposal, that rate could shift closer to 1.75–1.80%, reflecting increased home values and municipal budget adjustments.

What Does a 2–3% Increase Mean in Real Terms?

Let’s look at a real-world example for a $500,000 home in Austin:

That’s an increase of about $29 per month, which may seem small individually—but when combined with rising insurance premiums or HOA fees, it can noticeably affect affordability.

For higher-value properties, such as a $1.2M luxury home, the annual difference could reach $840–$1,200, impacting overall cost-of-ownership and lending ratios.

How This Impacts Buyers in 2025–2026

1. Affordability Adjustments
Mortgage pre-approvals that don’t factor in higher property taxes could result in overestimating budgets. Buyers should ensure their lender updates estimates for 2026 rates.

2. Shifts in Neighborhood Demand
Areas with lower tax rates—like parts of Cedar Park, Leander, and portions of South Austin—may attract more buyers seeking affordability.

3. Increased Focus on Long-Term Value
Buyers are prioritizing neighborhoods with strong resale potential and stable appreciation, offsetting tax increases through sustained property value growth.

What About Existing Homeowners?

Homeowners who purchased during 2020–2023—when prices surged—may see their assessed values rise, even with the state’s 10% annual cap on homestead increases.

Those not claiming homestead exemptions (such as investors) will feel the largest jumps in tax liability. Refinancing or appealing the assessed value may become essential strategies to manage costs.

Expert Insight from Maria Aguirre

“Taxes in Austin will always be part of the conversation,” says Maria Aguirre. “But what truly matters is how you structure your purchase—choosing the right location, negotiating price, and understanding your long-term financial plan. Those factors often outweigh a modest tax adjustment.”

Maria recommends that buyers:

• Review tax histories of specific neighborhoods before making offers.

• Consult both their Realtor® and lender to get accurate monthly cost projections.

• Consider newer developments with energy-efficient designs, which can offset annual expenses through utility savings.

FAQs

Will property tax increases slow down the Austin market?
Unlikely. Austin’s demand remains strong, especially among tech professionals and out-of-state relocations.

Are property taxes higher in Austin than in other Texas cities?
Slightly, yes. However, Austin’s growth and strong job market often balance the higher tax burden through long-term appreciation.

Can property taxes be appealed?
Yes. Homeowners can file a formal appeal if they believe their assessed value is too high—usually within 30–45 days of receiving notice.

Conclusion

While the 2026 property tax increase in Austin may modestly affect affordability, it’s unlikely to deter serious buyers. Instead, it underscores the importance of strategic planning, accurate budgeting, and expert guidance.

With Maria Aguirre’s experience in market analysis and local real estate dynamics, buyers can make informed decisions—selecting neighborhoods that balance tax impact, appreciation potential, and lifestyle goals.

Whether you’re purchasing your first home or investing in Austin’s luxury market, understanding taxes today means building smarter wealth tomorrow.