Austin’s Proposed Budget Pushes the Tax Rate to Its Legal Ceiling
What Austin proposed
City Manager T.C. Broadnax released the proposed fiscal year 2026-27 budget on Friday, July 10. It’s a $6.625 billion plan, and the piece that reaches property owners is the tax rate: 57.953 cents per $100 of taxable value, up from 52.4017 cents in the current year. The city projects that rate will bring in about $1.278 billion in total property tax revenue for operations, maintenance, and debt. Under the city’s own Taxpayer Impact Statement, the owner of a median-valued homestead without a senior exemption would pay an estimated $2,248.15 in city property taxes, roughly $177 more than this year, or about 8 percent.
Property tax isn’t the only line moving. The typical Austin Energy customer would pay about $3.66 more a month, and the typical Austin Water customer about $7.76 more. On the spending side, the budget trims roughly $5.1 million in grants to social service providers while shifting $19.4 million into Austin Public Health and homeless operations to keep city-run shelters funded, which the city describes as no net change to that total. None of this is final. City Council spends the next several weeks reviewing the proposal and votes on a budget in August, and the tax figures are estimates until certified appraisal rolls are locked in.
Why the rate went up while values went down
This is the part that trips people up, and it’s the part that matters. Texas caps how much more a city can collect. Under the 2019 law that governs this, a city’s operating revenue can rise only 3.5 percent above the prior year before the increase has to go to voters. That ceiling is called the voter-approval rate. Here’s the twist: the voter-approval rate is a rate, not a dollar figure, so when taxable values drop, the rate that raises that same capped amount of revenue has to go up. Austin expects overall taxable values to decline, so the rate that stays inside the 3.5 percent limit is higher than last year’s. A bigger rate on a smaller base can still be the same restrained revenue.
So the five-cent jump is not the city grabbing five cents more from everyone. It’s the arithmetic of the cap running in reverse. Whether your individual bill actually rises depends on what happened to your appraised value, which is why two owners on the same street can see the rate climb and end up in different places. Our guide to the Austin real estate tax protest covers how that appraised value gets set and challenged, and it’s the number you can actually influence.
What it means by situation
Homestead owners
If Austin is your primary home, your taxable value is shielded by the 10 percent annual homestead cap, so your assessment can’t jump more than 10 percent in a year regardless of what the market did. The city’s median estimate is about $177 more, but yours turns on your specific value and exemptions. Owners over 65 or with a disability have a separate ceiling that can hold the city portion flat. The homestead exemption and cap are the tools worth confirming you actually have on file.
Investors, second homes, and commercial owners
No homestead cap here, which means the full swing of rate and value hits your bill. A rental house, a downtown condo held as a pied-a-terre, or a commercial building feels the rate change without the 10 percent shield a primary residence gets. This is the group most exposed to a rate that just rose more than five cents, and the group for whom a value protest does the most work. Keeping the operating numbers clean through Austin bookkeeping makes it far easier to carry the property tax into the return and to plan around it.
People who moved to Austin for the tax math
Plenty of our clients relocated to Texas for one reason: no state income tax. That math is real, but it comes with a trade. Texas leans on property tax to fund local government, and this proposal is a live example of how that shows up. If you left New York or California income tax behind, the property side is where you feel the cost of the swap, and it’s worth running the full picture rather than one line of it. Our Austin tax preparation guide lays out the federal and Texas pieces that a no-income-tax state still leaves on your plate.
What’s still open
This is a proposal, not a done deal. Council can move money, adjust the rate within the legal ceiling, or restore some of the social service cuts before the August vote, and public budget hearings happen in between. The dollar figures also carry a footnote: they rest on estimated appraised values, and the certified rolls that finalize them arrive later, so the median-homestead number can shift. For 2026, the protest window already closed in the spring, so the value on this year’s bill is largely set. The move now is to make sure your exemptions are correct and to plan for next spring’s protest, which is the lever that actually changes what you owe. If a Travis County appraisal notice or a related IRS matter needs a response, that’s work we handle before the deadline runs.
How The Reed Corporation works with clients on this
We run the whole number for Austin owners, not one line of it. For clients who moved from a high-income-tax state, that means weighing the property tax against the income tax they no longer pay, so the relocation still pencils out after a rate increase like this one. We confirm homestead and senior exemptions are actually on file, flag properties where a protest next spring is worth the effort, and fold the property tax into the federal return and any entity that holds the real estate. A rate set at the legal ceiling isn’t a reason to panic. It’s a reason to check that every break you’re entitled to is in place before the bill arrives.
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Frequently Asked Questions
How much is Austin’s property tax rate going up?
The proposed city rate is 57.953 cents per $100 of taxable value, up from 52.4017 cents in the current year, a jump of about 5.55 cents. That’s the City of Austin portion only, and it doesn’t include the separate rates from the school district, Travis County, and other local entities that also appear on your bill. Under the city’s Taxpayer Impact Statement, a median homestead without a senior exemption would owe roughly $2,248 in city property taxes, about $177 more than this year. The proposal isn’t final. City Council reviews it over several weeks and votes in August, and the numbers can move before then. The rate you actually pay also depends on your appraised value and exemptions, not just the rate.
Why did the rate rise if property values are falling?
Because the cap that limits Austin is written as a revenue limit, not a rate limit. Texas law lets a city collect only about 3.5 percent more operating revenue than the prior year without holding an election. When taxable values fall, the rate needed to raise that same capped revenue goes up. So a declining value base and a rising rate happen together, and the rate can climb more than five cents while the revenue increase stays inside the legal limit. It feels backward, but it’s the math of the cap working as designed. The practical takeaway is that a higher rate doesn’t automatically mean a proportionally higher bill for you, because your own value may have dropped at the same time.
Does this trigger a November tax election?
No. The proposal sits exactly at the voter-approval rate, which is the highest rate Austin can adopt without an election. An election is only forced when a city adopts a rate above that ceiling. By setting the rate right at the line, the city collects the maximum it’s allowed to collect while avoiding the automatic November vote that going higher would require. That’s a deliberate choice, and it’s a common one for Texas cities working within the 3.5 percent cap. If the council decided during its August deliberations to push the rate above the voter-approval rate, that would change, and an election would be scheduled. As proposed, though, there’s no ballot measure attached to this rate.
I own a rental in Austin but live elsewhere. How does this hit me?
Harder than it hits a primary resident, because the 10 percent homestead cap only protects an owner-occupied home. A rental, a second home, or commercial property has no cap on its taxable value, so both the value and the rate flow through to your bill in full. That makes the appraised value the number worth fighting, since it’s the one you can influence through a protest, and it makes clean records on the property important for both the protest and your federal return. If you hold the property through an LLC or report it on Schedule E, the Austin property tax is a deductible cost, but only if it’s tracked and documented. This is the group we most often steer toward a spring protest, because the dollars at stake are larger.
I moved to Austin to escape state income tax. Did I still come out ahead?
Usually yes, but the property tax is where the trade shows up. Texas has no state income tax, so high earners who left New York or California often save far more on income than they pay in higher property tax. A rate increase like this one narrows that gap without erasing it, especially for people with large incomes and moderate homes. The answer depends on your numbers: someone with a high salary and a modest house tends to stay well ahead, while someone with modest income and an expensive house feels the property side more. Running both sides of the swap, income tax saved against property tax paid, is the only way to know where you actually land. We do that comparison for clients who relocated.
Can I still lower my 2026 Austin property tax?
For the 2026 bill, the main lever, the value protest, has mostly closed, since the Travis County deadline fell in the spring. What you can still do is confirm your exemptions are correctly on file, because a missing homestead, senior, or disability exemption quietly costs you every year until it’s fixed, and some can be applied retroactively. Beyond that, the work is forward-looking: plan to protest your appraised value next spring, when the window reopens, since that’s the number that drives your bill more than the rate does. If you bought recently or your use of the property changed, review whether you qualify for an exemption you’re not claiming. Those are the moves that still put money back, even after the rate is set.