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New development in Austin is slowing, resulting in less city tax revenue. (Courtesy city of Austin)What else?<\/p>\n\t\t\t\t\t\t\tAustin anticipates declining value on its tax rolls to support city operations this year, thanks to a slowdown in local development activity and rising property tax challenges or exemptions.<\/p>\n
The big picture<\/p>\n
Austin’s property tax revenue funds most public-facing city services. While years of rapid population growth and building activity had boosted the city’s tax rolls, overall taxable value is now in line to decline for the second straight year as city officials expect to face another challenging budgeting cycle this summer.<\/p>\n
After a 2.7% drop in 2025, the Travis Central Appraisal District now projects Austin’s taxable value across Travis County only will fall by 3.1% this year to $210.6 billion. Those figures are based on preliminary reports from TCAD, which values about 95% of properties in Austin. Hays and Williamson county appraisals aren’t yet available.<\/p>\n
Erik Nelson, deputy director of Austin’s budget office, said “essentially all” types of property are contributing to lowered values.<\/p>\n
“With respect to residential property, median home prices and sales have declined, and inventory is growing. Industrial development is slowing, and new office building development has nearly halted,” he said at an April 15 briefing.<\/p>\n
Zooming in<\/p>\n
Annual property tax increases in Texas are limited by a 2019 state law that caps cities’ year-over-year revenue growth at 3.5%, down from a previous 8%. That ceiling applies only to properties that were previously taxed, meaning new construction isn’t counted against that cap and can result in more revenue for cities.<\/p>\n
Austin’s development boom helped bring in more taxes for years. However, slower activity is now reducing additional value faster than expected.<\/p>\n
New construction in Austin is expected to add $2.8 billion in value for the 2026 tax year, per TCAD, nearly 10% below city staff projections and a decline from last year’s $3.3 billion total. That would represent a steep drop from just two years ago, when new construction value peaked at nearly $5.5 billion.<\/p>\n
Given current financing challenges and the amount of time needed to develop new buildings, Nelson said Austin will likely continue to have “relatively modest” additions to the tax rolls for years.<\/p>\n
New development in Austin is slowing, resulting in less city tax revenue. (Courtesy city of Austin)What else?<\/p>\n
Nelson cited regulatory and legal changes as other factors now affecting Austin’s tax revenues.<\/p>\n
One is last year’s voter-approved state Proposition 9, which increased Texas’ tax exemption<\/a> for business personal property by 50 times this year, from $2,500 to $125,000. That measure was meant to save businesses thousands of dollars annually, and was anticipated to result in hundreds of millions of dollars in lost revenue<\/a> for any cities, counties and other entities that don’t raise their taxes.<\/p>\n Austin can expect 0.5%-2% less taxable value this year from the new business personal property exemption alone, according to TCAD.<\/p>\n Separately, Nelson said the appraisal district is reporting an “extremely high volume” of court appeals over property valuations that will impact Austin’s rolls.<\/p>\n TCAD has seen a surge in appraisal protests<\/a> for years. If a settlement over a property value isn’t reached in that process, owners can seek further review by the Appraisal Review Board. And if they disagree with the board’s decision, owners may then appeal their case in court.<\/p>\n Nelson said successful court appeals led to a $1.8 billion decrease in Austin’s original 2025 tax rolls since last summer alone, another trend likely to continue.<\/p>\n \u201cThis is going to adversely affect our current year property tax collections. And because of the way the state property tax calculations work, there will likely be adverse effects as we project revenue for [fiscal year 2026-27] as well,” he said.<\/p>\n What’s next<\/p>\n After members of City Council’s finance committee reviewed the new tax roll information, the full council will discuss city finances and the FY 2026-27 budget process at an April 21 work session.<\/p>\n