For out-of-state buyers relocating to McKinney, property taxes can be a major financial factor in homeownership. Texas has no state income tax, but it offsets this with higher property taxes, particularly in cities like McKinney, where luxury home values are rising. Here’s what you need to know about
McKinney’s property tax system, rates, exemptions, and strategies to lower your tax burden.
1. Understanding Property Tax Rates in McKinney, TX
Property taxes in Texas are based on a percentage of the assessed home value, which is determined annually by the Collin County Appraisal District (CCAD).
Average Property Tax Rates in McKinney (2024 Estimates)
Taxing Authority | Estimated Rate |
McKinney City Tax | 0.41% – 0.50% |
McKinney ISD (School Taxes) | 1.30% – 1.40% |
Collin County Tax | 0.16% – 0.20% |
Total Estimated Property Tax Rate | 2.0% – 2.5% of Assessed Value |
What This Means for Luxury Home Buyers
Home Value | Estimated Annual Property Tax (2.2%) |
$1M Luxury Home | $22,000 per year |
$2M Estate Home | $44,000 per year |
$3M Custom Home | $66,000 per year |
Key Takeaway: Texas does not have a state income tax, but property tax rates are higher than in many other states. However, they are still lower than states like New Jersey and Illinois, where rates exceed 2.5%.
2. How Texas Property Taxes Compare to Other Luxury Markets
State | Average Property Tax Rate | State Income Tax |
McKinney, TX | 2.0% – 2.5% | 0% |
California (Los Angeles, Orange County) | 1.0% – 1.2% | Up to 13.3% |
New York (Westchester, Long Island) | 1.5% – 2.5% | Up to 10.9% |
Florida (Miami, Palm Beach) | 1.0% – 2.0% | 0% |
Illinois (Chicago Suburbs) | 2.5% – 3.0% | Up to 4.95% |
Key Takeaway: Even though McKinney’s property tax rate is higher than Florida or California, the lack of state income tax makes Texas a more favorable financial choice overall.
3. How to Lower Your Property Tax Burden in McKinney
A. File for a Homestead Exemption (If Primary Residence)
A homestead exemption reduces the taxable value of a home, lowering your tax bill.
Savings: Up to $5,000–$10,000 per year, depending on home value.
Eligibility: Must be your primary residence (investment properties do not qualify).
How to Apply: File with the Collin County Appraisal District (CCAD).
B. Protest Your Home’s Assessed Value
Texas property taxes are based on assessed market value, which is set by the appraisal district each year.
If your home is overvalued, you can file a protest to reduce your tax burden.
Many luxury homeowners hire property tax consultants to handle this process.
C. Choose a Home in a Lower-Tax Area Within McKinney
Certain HOA communities have lower city tax rates.
Areas outside McKinney ISD may have lower school district taxes.
D. Consider New Construction Homes
Some luxury home communities offer property tax abatements for a set period.
Builders may provide incentives to offset tax costs in the first few years.
4. Paying Your Property Taxes: What to Expect
When Are Property Taxes Due in McKinney?
Tax bills are issued in October each year.
Full payment is due by January 31 of the following year.
Late payments incur penalties and interest, so many homeowners pay through an escrow account with their mortgage lender.
Can You Pay in Installments?
Yes, Texas allows quarterly installment payments for homeowners who qualify, typically for senior citizens or disabled persons.
5. Final Thoughts: Should Out-of-State Buyers Worry About McKinney’s Property Taxes?
✅ McKinney’s property taxes are higher than some states but are offset by Texas’ lack of income tax.
✅ Luxury buyers can save money with homestead exemptions and tax protests.
✅ McKinney offers better value per square foot compared to other luxury markets like California and New York.
Would you like assistance with property tax estimates for specific luxury neighborhoods in McKinney?
Call us at 469-269-6541 for more information about McKinney real estate!
FIND A LUXURY HOME IN MCKINNEY, TEXAS WITH NITIN GUPTA, BROKER ASSOCIATE, REALTOR®.
When purchasing a luxury home in McKinney, Texas, it’s essential to consider factors such as location, architectural style, security, and amenities to ensure the home meets both lifestyle and investment needs. By selecting a property in a prestigious neighborhood with numerous amenities and security measures, buyers can ensure they’re making a valuable and rewarding investment in the vibrant McKinney market.
For those looking to invest in luxury homes in McKinney, Texas, Nitin Gupta is an expert real estate professional ready to assist. Known for his extensive experience, market insights, and numerous awards, he is committed to finding his clients the best properties in the area.
Contact Nitin Gupta at 469-269-6541 or send a message today to explore exclusive listings and secure your ideal luxury residence in one of McKinney elite communities.
