Houston Property Taxes, Plainly: MUDs, Rates, and the New Homestead Math

Property tax is the number that decides whether a Houston monthly payment works. It is also the number buyers guess at most often, because the bill is assembled from eight separate lines and the rules changed again in 2025.

This is a plain reading of how it works: what a MUD is, what a 77007 rate is actually made of, what the new homestead exemption does to the math, and what to check before you write an offer.

What a MUD is and why Inner Loop addresses usually do not have one

A municipal utility district is a local government created to finance water, sewer and drainage infrastructure in areas the city utility does not serve. Most Houston area MUDs sit outside city limits, where a developer built a subdivision on land with no existing utility system. The district issues bonds to pay for that infrastructure, then levies its own property tax to service the debt and run the system.

That levy is a separate line on the tax bill, in addition to the school district, the city or county, and everything else. It is not a hidden fee and it is not unusual. It is the cost of building utilities where none existed.

Inner Loop addresses inside the City of Houston, on city water and city sewer, typically have no MUD line at all, because the city utility already serves them. That trims the total rate compared with an otherwise similar suburban address inside a district. When a listing says no MUD tax, that is what it means. It does not mean the taxes are low in absolute terms, and it does not tell you anything about the appraised value.

MUD rates vary widely from district to district and change as bonds are paid down, so there is no single number to quote. A newer district that recently issued debt generally carries a higher levy than an older one that has been retiring bonds for two decades. That is why comparing two homes on price alone can mislead: an identical list price inside a district and inside city limits can produce meaningfully different monthly payments. The tax certificate, not the listing description, settles which case you are in.

Public improvement districts work on a similar principle and show up the same way, as an extra assessment tied to the address. They are less common inside the Loop than in master planned areas, but the habit of checking is the same one.

What a 77007 tax bill is made of

Here are the 2025 adopted rates for a Cottage Grove address, stated per 100 dollars of assessed value, per the jurisdiction table at hctax.net.

Two things stand out. The school district is by far the largest single line, which is why the school exemption matters more than any other. And the last three lines together come to under 0.06, which is a reminder that the small jurisdictions are not where the money is.

Rates are adopted annually by each jurisdiction and can move in either direction. Treat the table above as the 2025 picture and verify the current year at hctax.net.

Note what is not on the list. There is no MUD line and no PID assessment. Every jurisdiction here is a countywide or citywide body that serves hundreds of thousands of parcels, which is what people mean when they describe an Inner Loop address as having a simple tax profile.

The rate is only half of the calculation. Harris Central Appraisal District sets the appraised value, the exemptions on file reduce it to a taxable value, and the rate applies to what is left. Two neighbors on the same street with the same rate can owe amounts that differ by thousands, because one filed a homestead exemption and the other did not, or because one has owned long enough for the annual appraisal cap on a homestead to hold the taxable value below market.

The homestead exemption got much bigger

In November 2025 Texas voters approved raising the school district homestead exemption to 140,000 dollars, retroactive to tax year 2025. That amount comes off the taxable value for the school district portion of the bill, which is the largest line on the table above.

The school exemption is not the only one. HISD also carries a 20 percent local option homestead exemption, as do the city, the county and several other jurisdictions. The local option is a percentage of value rather than a flat dollar amount, so it scales with the appraisal. Owners who qualify for over-65 or disability exemptions receive larger amounts still, and those come with their own rules on school tax ceilings.

There is also a timing effect worth understanding. A homestead in Texas carries an annual cap on how much the taxable value can rise year over year, which is separate from the exemption amount. The cap builds value over time for an owner who stays put, and it resets when the property changes hands. That is part of why a seller's current tax bill is a poor predictor of a buyer's first-year bill.

Exemptions apply only to a principal residence, and only to the owner who files for them. Which exemptions are actually on an account is a matter of record, so check the account rather than assuming the general rule applies.

A worked example

Take a home valued at 430,425 dollars, which is the 2025 HCAD value for the property this site is about. The arithmetic below is illustrative only. It uses the 2025 rates in the table and a full homestead package of the 140,000 dollar school exemption plus 20 percent local option exemptions where they apply.

• With no exemptions: roughly 9,150 dollars a year.
• With a full homestead package: roughly 6,200 dollars a year.

The gap is close to 3,000 dollars a year, or about 245 dollars a month inside an escrow payment. That is the size of the exemption question, and it is why filing after closing is not a paperwork chore.

Both figures are illustrative. Rates change annually, appraised values change annually, and exemption eligibility depends on the owner. Your exemptions and the current bill govern. Verify at hctax.net and with the Harris Central Appraisal District.

What buyers should actually do

1. Read the tax certificate for MUD or PID lines. The certificate lists every jurisdiction that levies against the property. If there is a municipal utility district or a public improvement district, it appears there. Do not infer it from the listing.
2. File the homestead exemption after closing. The exemption follows the owner, not the house, so the seller's exemption does not transfer to you. File with HCAD once the deed is recorded and confirm current deadlines with them.
3. Use the HCAD estimator rather than the seller's bill. A prior owner's payment reflects their exemptions and their appraisal history, not yours.
4. Expect a sale to reset appraised value. A purchase can move the appraised value toward the sale price, so the first full year of ownership can differ from the year before it. Budget from an estimate, not from the previous bill.

It is also worth pulling the account history on any home you are serious about. The appraisal record shows how the value has moved, whether the prior owner protested, and which exemptions were in place. None of that transfers to you, but it tells you how the district has been treating the property and where your own estimate should start.

If you are financing, ask your lender how they are escrowing taxes for the first year. Lenders often escrow on the seller's figures, which can produce a shortfall or a refund once the new appraisal and exemptions settle.

How this address sits

2716 Sherwin is a City of Houston address on city water and sewer with no MUD tax, in the 77007 rate picture described above. The 2025 HCAD value is 430,425 dollars, and the HOA runs 2,000 dollars a year plus a 300 dollar transfer fee per prior records, which is separate from the tax bill entirely. The sale and lease numbers collect the tax, HOA and school details in one place. All figures are per Harris County records and prior records. Buyer to verify all data, measurements, schools, fees and taxes.

Putting it together

Read the rate, read the value, then read the exemptions, in that order. The rate tells you the jurisdiction mix and whether a MUD is in play. The value tells you what is being taxed. The exemptions tell you what you will actually pay, and after November 2025 they carry more weight than they have in years.

To see the numbers on this home in person, book a showing. For the neighborhood context around these figures, read Living in Cottage Grove, Houston. For how the HOA and gated enclave side works, read freestanding versus shared wall in the Inner Loop, and for the systems side of a purchase, read what a new roof means when you are buying a Houston home.