In Texas, all homeowners pay a Municipal Utility District (MUD) tax in addition to their regular property taxes. The MUD tax is a fee assessed by your municipal district to help fund the development and maintenance of infrastructure in areas with new homes. This tax can be costly, depending on where you live in the state. Let’s look at how the MUD tax works and how to lower your taxes!

The MUD Tax Explained

A MUD tax assists in the developing and upkeep of infrastructure in regions with more new homes. MUDs allow for additional neighborhood construction in bigger cities and surrounding areas. The MUD tax gives builders and developers more options for creating new housing for families and individuals at all budget levels.

However, your MUD tax may be significant depending on where you live. For a $300,000 home, the MUD tax can be as much as $4,200 per year! (1) 

If you live in a MUD tax district, your property taxes will be more. That’s because the MUD tax is part of your total yearly property tax bill.

Why Did Municipality Districts Create MUD Taxes?

In 1949, the state of Texas established Municipal Utility Districts (MUD) to finance water and sewer projects in rural areas that lacked the resources to build their own infrastructure.

Today, MUDs can be found all over Texas, from rural areas to the outskirts of major cities. The property owners of the MUD appoint the board of directors.

MUD Tax Financing For Projects

The MUD’s board of directors determines the tax rates within its boundaries. This additional MUD tax, in addition to regular property taxes, goes to the MUD rather than your county or city government.

MUDs use the money from the MUD tax to finance

  • Water projects
  • Sewer projects
  • Roads
  • Parks
  • Other infrastructure

The amount of the MUD tax can vary significantly from one MUD to another, depending on what projects the MUD is currently financing.

Why Is the MUD Tax a Big Deal?

The MUD tax can sometimes be a significant burden on property owners. For example, if you live in a MUD financing a large water project, your MUD tax could be several thousand dollars per year. However, there are ways to lower your MUD tax bill.

You Can Lower Your MUD Tax

One way to lower your MUD tax is by getting an exemption. MUDs offer exemptions for some agricultural properties. If you use your property for agricultural purposes, you may be eligible for a tax exemption.

Lowering your MUD tax bill is another approach. You may contact the MUD board and request a reduction in the rate. In some situations, the MUD board may be willing to agree to a lower tax rate for all property owners in the community.

You can also attempt to remove the tax-boosting MUD board members. If you don’t like how your MUD board operates, you have the right to vote out the MUD board members who are raising your taxes. You can usually vote in May for your MUD elections.

And finally, you may appeal your property’s estimated value to reduce your MUD tax bill. The MUD board uses the assessed value of your property to compute your MUD tax obligation. So, if you think the appraisal assigned to your home was too high, you can protest it with the county appraisal office.

Protesting Your Tax-Assessed Value

Your home may be one of many that have never received an in-person appraisal. Many are unaware that the district issuing the tax bill has never appraised your property in person! 

According to Texas Home Appraisers, ” In most cases the ‘proposed value’ of your home is based off of a mass appraisal techniques utilized by each county appraisal district. This practice is common since no appraisal district has the manpower or time available to appraise each and every home individually To manage such a large workload the appraisal district uses a mass appraisal system based on typical property values in your area to appraise your entire neighborhood.”

In Harris County, you can submit your protest through the iFile system. Or you can file a protest in person or by mail at the Appraisal Review Board office in downtown Houston at 1001 Preston, Suite 911, Houston, TX 77002-2023. 

Paying Less Tax

Many Texas property owners believe the MUD tax is a significant burden, yet there are methods to reduce your MUD tax payment. If your MUD tax is excessive, you can appeal the assessed value of your home, bargain with the board, or apply for an exemption from the MUD tax. Also, take advantage of your right as a property owner to vote out the MUD board members raising your taxes.

We Can Help

At Jarrett Law, our experienced real estate attorneys can guide you through the process of lowering your property tax bill. We are here for you every step of the way, from beginning to end.  We understand the nuances of Texas’s property tax system and can assist you in saving money on your property taxes. Contact us today to find out how we can help you!

Jarrett Law has successfully represented homeowners and business owners in Harris County and the surrounding counties of Fort Bend, Brazoria, Montgomery, Galveston, Waller, Grimes, Walker, Liberty, and Chambers.