Austin Property Taxes Set to Skyrocket in 2025

Austin’s affordability crisis is about to deepen. Home prices are down, mortgage rates are high, and now the city is proposing the largest property tax increase in two decades. Here’s what’s happening, why it matters, and how it could impact homeowners, renters, and the local housing market.

1. The Biggest Tax Hike in 20 Years

The Austin City Council has approved a maximum property tax rate of $0.60 per $100 of valuation, a 25% jump from the current $0.4776 rate.

• Triggers a November 2025 tax election due to exceeding the state’s 3.5% cap.
  
  
• Impact on median home ($500,000): Taxes could rise from $2,400 to nearly $2,900 annually, $421 more per year.
  
  

2. Home Values Are Falling: But Taxes Keep Rising

• Peak median price: $550,000 (2022)
  
  
• July 2024 median: $435,000 (down 21%)
  
  
• Property taxes in Austin have risen over 50% since 2020, even as values have fallen.
  
  
• Many homeowners are paying more while their equity shrinks.
  
  

3. State Tax Relief at Risk

In 2023, Texas lawmakers approved an $18 billion property tax cut, raising the homestead exemption to $100,000 and compressing school district tax rates.

• Proposed SB4 would raise the homestead exemption again to $140,000.
  
  
• HB9 would increase the business personal property exemption to $125,000.
  
  
• Both require voter approval in November, but Austin’s hike could erase those savings.
  
  

4. Why the City Says It Needs the Money

Austin’s proposed $6.3 billion budget (larger than Dallas’s) faces a funding gap due to:

• Loss of COVID-era federal funding
  
  
• Rising public safety costs, police and fire contracts adding over $120 million by 2027
  
  
• A push to avoid cuts to core services like police, fire, and EMS
  
  

5. Housing Market Ripple Effect

If passed, the tax hike could:

• Push landlords to raise rents (already 30% higher than in 2020)
  
  
• Encourage investors to sell properties, increasing housing supply and pushing prices down further
  
  
• Put additional pressure on an already cooling real estate market
  
  

6. The Affordability Equation

Austin residents are juggling:

• Down 21% in home values from peak
  
  
• Higher mortgage payments due to 6.5-7% interest rates
  
  
• Rising property taxes
  
  
• Cooling job market with major layoffs in tech
  
  
• Inflation on essentials like groceries, gas, and utilities
  
  

7. November’s Big Decision

Voters will choose between:

• Approving the tax hike: Raises $175 million, keeps services funded
  
  
• Rejecting the hike: Forces city budget cuts, risks slower emergency response times
  
  

Bottom Line:

This decision will directly shape Austin’s affordability, and possibly push more residents to surrounding suburbs.