Why One Street Can Cost You Thousands More Per Year
Property tax rates in Central Texas are not one-size-fits-all. In fact, they can vary wildly from neighborhood to neighborhood, sometimes literally just down the street. We regularly see tax rates as low as 1.6% and others pushing close to 3%. That gap can translate into thousands of dollars per year, and in some cases close to a thousand dollars per month, depending on the price point.
Zillow and Realtor.com consistently report that buyers today are more monthly-payment sensitive than they have been in years. That makes property taxes one of the most important, and most overlooked, factors in a home purchase.
Let’s break down why property taxes vary, how MUDs, PIDs, and special taxing districts impact homeowners, and what this really means long term.
How Property Taxes Are Calculated in Texas
Texas property taxes are based on two components:
Appraised Value
Set by the county appraisal district as of January 1 each year.
Tax Rates
Set by each taxing entity associated with the property. This can include the city, county, school district, MUDs, PIDs, and special districts. These are usually set around October of each year.
The more taxing entities attached to a property, the higher the overall tax rate is likely to be.
Most primary homeowners qualify for a homestead exemption, which currently removes approximately $140,000 from the taxable value for school taxes, with additional exemptions depending on the location.
Round Rock: Same Area, Very Different Tax Outcomes
Round Rock is a perfect example of how dramatically tax rates can differ within a small radius.
Vizcaya
Approximate tax rate: 1.8%
Fewer taxing entities, no MUD.
Paloma Lake
Approximate tax rate: 1.9%
Includes a MUD, though the rate has decreased from prior years.
Salerno
Approximate tax rate: 2.73%
Seven taxing entities, including a MUD and the East Williamson County Higher Education Center. This special taxing district funds a multi-institution higher education campus serving the Hutto and Taylor areas.
What That Looks Like on a $500,000 Home
Assuming:
- $500,000 appraised value
- $140,000 homestead exemption
- $360,000 taxable value
Vizcaya at 1.8%
Annual taxes: $6,480
Monthly taxes: $540
Paloma Lake at 1.9%
Annual taxes: $6,840
Monthly taxes: $570
Salerno at 2.73%
Annual taxes: $9,828
Monthly taxes: $819
That is a $279 per month difference between Vizcaya and Salerno on the same-priced home. Over a decade, that difference approaches $34,000, even before factoring in appreciation or rate increases.
Georgetown: Proof That Lower Tax Rates Still Exist
A common misconception is that new construction always equals high property taxes. Georgetown challenges that assumption.
Several Georgetown communities, including The Canyons at HCH Ranch, offer tax rates around 1.6 percent or lower, even with newer homes. Many of the popular 1+ acre homesites throughout Georgetown also benefit from fewer taxing entities, which keeps rates down.
That said, Georgetown also has higher-tax neighborhoods.
Communities like Morningstar and Parmer Ranch currently sit closer to 2.5–2.6 percent, largely due to MUDs and infrastructure funding tied to large-scale development.
Liberty Hill: Why Neighborhood-Level Research Matters
Liberty Hill tells the same story in a different zip code.
- Lariat
Approximate tax rate: 2.6% - Clearwater Ranch
Approximate tax rate: 1.6%
Same general area. Very different long-term cost of ownership.
Austin Property Taxes: Established vs New Construction
Austin follows a familiar pattern.
More established neighborhoods such as Scenic View, Hyde Park, Rosedale, and Brentwood often benefit from lower property tax rates, largely because infrastructure costs were paid long ago.
In contrast, newer master-planned developments like Easton Park currently carry tax rates around 2.7 percent, driven by MUDs and ongoing infrastructure investment.
Zillow and Realtor.com both note that buyers shopping in Austin today are highly focused on total monthly payment, not just purchase price. Higher tax rates can quickly push a home out of reach, even when the price looks attractive on paper.
What Are MUDs, PIDs, and PUDs?
MUDs (Municipal Utility Districts)
These fund infrastructure like roads, water, sewer, and drainage in developing areas. The cost is passed on to homeowners through higher tax rates.
PIDs (Public Improvement Districts)
Often used to fund roads, landscaping, amenities, or maintenance. These may appear as higher tax rates or additional assessments.
PUDs (Planned Unit Developments)
A development structure that often includes layered taxing entities and long-term infrastructure costs.
None of these are inherently bad. They simply shift the cost of development to the homeowner over time.
The Price Point Trap Buyers Need to Avoid
Higher tax rate neighborhoods often offer lower purchase prices or attractive builder incentives. In the short term, that can feel like a win.
Long term, it can hurt.
We recently met with a seller who bought into a community with strong incentives and a great price point, but a 2.65 percent tax rate. In today’s market, where buyers are extremely payment-sensitive, that higher tax rate has become a resale challenge.
Homes in the neighborhood are sitting, while the builder continues to dominate sales with incentives. What saved money upfront is now working against resale value.
The Big Takeaway
Property taxes vary by city, neighborhood, street, and sometimes even school zone. Focusing only on purchase price ignores one of the most powerful drivers of long-term cost and resale success.
Understanding how property taxes impact monthly payments today and marketability tomorrow is essential. This is where experienced guidance makes all the difference. When you’re considering buying or selling in the Central Texas area, be sure you work with someone who intimately understands neighborhoods, areas, and tax rates so that they can help keep you financially comfortable as a buyer or strategize how to market within the tax rate.
Why Buyers and Sellers Trust T. Kerr Property Group
T. Kerr Property Group is the #1 team in Williamson County for listings sold and buyers represented and ranks in the top 2 in Travis County (excluding builders). We are PT50 winners, recipients of the ABJ Residential Real Estate Awards, and have been featured in Real Producers. Our team has been voted Best in Round Rock and Best in Georgetown by the community and is consistently recognized as top producers and trusted experts in Georgetown, Round Rock, Austin, and surrounding Central Texas markets. We are known for education-driven guidance, fierce advocacy, and helping clients make smart real estate decisions that stand the test of time.