What Is ISD Tax? Rates, Exemptions, Deferrals, and Payment

The ISD tax in Texas is the property tax your local Independent School District levies to fund public schools within its boundaries. The school board sets the rate each year in two parts, and a mandatory $140,000 homestead exemption cuts the taxable value of your primary home before the rate is applied. Seniors and homeowners with disabilities get an additional $60,000 exemption plus a ceiling that freezes their school tax bill.

What Makes Up the ISD Tax Rate

Every district’s rate has two components. The Maintenance and Operations (M&O) rate covers day-to-day costs like teacher salaries, classroom supplies, utilities, and administrative staff. The Interest and Sinking (I&S) rate pays debt service on voter-approved bonds used for capital projects like new campuses, land, or bus fleets.¹

The M&O rate is capped by statute. For tax year 2025, the maximum M&O rate is $0.8022 per $100 of taxable value, which combines the district’s maximum compressed rate (ranging from $0.5689 to $0.6322) plus enrichment pennies.² If a school board wants to adopt a rate above its voter-approval tax rate, the district must hold an election and win majority approval.³ The I&S rate floats with the district’s outstanding bond obligations, and voters must approve those bonds before the district can levy the corresponding I&S tax.

Texas appraises property at full market value, so there is no fractional assessment ratio softening your base. Your county appraisal district sets the appraised value; subtract any exemptions you qualify for to get the taxable value; multiply that by the combined M&O plus I&S rate. That is your ISD tax bill.

The Residence Homestead Exemption

The biggest reduction most homeowners see comes from the residence homestead exemption. Every Texas school district must exempt $140,000 of a home’s appraised value from school taxes.⁴ On a $350,000 home, only $210,000 is subject to the school rate. The 89th Texas Legislature raised the exemption from $100,000 through Senate Bill 4.²

To qualify, you must own the home, use it as your principal residence, and hold a Texas driver’s license or state ID with an address matching the property. Apply using Form 50-114, filed with the appraisal district in the county where the property sits.⁵ Most districts accept the form online, by mail, or in person. Once approved, the exemption stays in place automatically each year unless you move or change your principal residence.

Extra Relief at 65 or With a Disability

Homeowners who are 65 or older, or who have a qualifying disability, receive an additional $60,000 school district exemption on top of the standard $140,000.⁴ For a qualifying homeowner with a $350,000 home, that leaves only $150,000 subject to school taxes. The 89th Legislature raised this additional exemption from $10,000 to $60,000 through Senate Bill 23.²

The School Tax Ceiling

Once you turn 65 or qualify as disabled, the school district cannot charge you more than the amount it imposed in the first year you qualified for the exemption on that homestead.⁶ Even if the district raises its rate or your property value climbs, your school tax bill stays frozen at that ceiling. The ceiling adjusts down if the district lowers its rate or increases exemptions, but it never rises.

The one exception is significant home improvements. Adding a room, building a pool, or making other enhancements beyond basic repairs lets the district raise your ceiling by the tax on the added value.⁶ Repairs and improvements required by government code compliance do not.

Tax Deferral

Homeowners who are 65 or older, disabled, or qualified disabled veterans can defer property tax collection on their homestead entirely. You file an affidavit with the chief appraiser, and once it is on record, no taxing unit can sue to collect delinquent taxes or sell your property at a tax sale while you continue to own and live in the home.⁷ The tax lien stays on the property and interest accrues at 5 percent per year instead of the standard 1 percent per month, but no penalties accumulate during the deferral. Collection resumes 181 days after you stop occupying the home as your principal residence.

Paying the Bill

Tax bills go out starting in October and are due upon receipt. The hard deadline is January 31 of the following year. Any balance remaining on February 1 is delinquent.⁸

Many homeowners pay through a mortgage escrow account, where the lender collects a portion with each monthly payment and remits the tax on your behalf. If you handle it yourself, most county tax assessor-collectors accept online payments through their portal using a credit card, debit card, or electronic check. Card payments usually carry a convenience fee. You can also mail a check or money order before the deadline. Once the payment processes, the tax office updates your account, and you can download or request a receipt.

Installment Plans

If you are 65 or older, disabled, or a qualifying disabled veteran, you can split your homestead taxes into four equal installments without penalty or interest, as long as you make the first payment and request the agreement before the delinquency date.⁹ A separate installment option exists for homeowners and certain small businesses in areas declared disaster or emergency zones. Missing any installment triggers a 6 percent penalty and 1 percent monthly interest on the unpaid amount.

Penalties for Late Payment

The penalty and interest schedule escalates quickly. A tax unpaid on February 1 immediately incurs a 6 percent penalty. Each additional month or partial month of delinquency adds another 1 percent, so by June the cumulative penalty reaches 11 percent. If the tax is still unpaid on July 1, the total penalty jumps to 12 percent regardless of how many months have passed.¹⁰

On top of the penalty, interest accrues at 1 percent per month for every month the tax remains unpaid. Both penalty and interest keep running even after a court judgment. For a $5,000 tax bill left unpaid until July, you would owe $5,000 plus $600 in penalties (12 percent) plus $250 in interest (5 months at 1 percent each), for a total of $5,850. After July 1, an additional collection penalty of up to 20 percent may also apply once the account is referred to a delinquent tax attorney.¹⁰

Fraudulently claiming a homestead exemption carries a harsher consequence. If your exemption is canceled because the property was not your principal residence and you claimed exemptions on multiple homesteads, the delinquent taxes incur a flat 50 percent penalty instead of the standard monthly schedule.¹⁰

Protesting Your Appraised Value

Because the appraised value drives your ISD tax, protesting an inflated appraisal is often the fastest way to lower the bill. Every property owner has the right to protest before the Appraisal Review Board (ARB).¹¹ It is worth doing even if the overvaluation seems modest, because the tax compounds year after year on the inflated base.

File a written Notice of Protest with the ARB by May 15 or within 30 days after the appraisal notice was delivered to you, whichever is later.¹² Most districts accept the notice through an online portal, and you can upload supporting evidence such as recent comparable sales, photos of property condition, or an independent appraisal. If you miss the deadline, you can still file before the appraisal records are approved if you show good cause.

After you file, the appraisal district typically offers an informal meeting with a staff appraiser, and most protests are resolved there. If the informal meeting does not produce a result you accept, the case moves to a formal hearing before the ARB, an independent panel of local citizens who issue a written order setting the property’s value. If you disagree with that order, you can file a lawsuit in district court or request Regular Binding Arbitration through the Comptroller’s office within 60 days of receiving the order.¹³

1
State of Texas. Texas Code Education Code 45.001 – Bonds and Bond Taxes
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Texas Education Agency. Tax Year 2025 Maximum Compressed Tax Rates
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State of Texas. Texas Code Tax Code 26.08 – Election to Reduce Tax Rate
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State of Texas. Texas Code Tax Code 11.13 – Residence Homestead
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Texas Comptroller of Public Accounts. Property Tax Exemptions
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State of Texas. Texas Code Tax Code 11.26 – Limitation of School Tax on Homesteads of Elderly or Disabled
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State of Texas. Texas Code Tax Code 33.06 – Deferred Collection of Taxes on Residence Homestead of Elderly or Disabled Person or Disabled Veteran
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Texas Comptroller of Public Accounts. Paying Your Taxes
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Texas Comptroller of Public Accounts. Payment Options
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State of Texas. Texas Code Tax Code 33.01 – Penalties and Interest
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State of Texas. Texas Code Tax Code 41.41 – Right of Protest
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State of Texas. Texas Code Tax Code 41.44 – Notice of Protest
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Texas Comptroller of Public Accounts. Regular Binding Arbitration