CITY OF KATY, Texas (CoveringKaty.com) — The City of Katy is proposing to lower its property tax rate, but a state-required notice tells residents the city is increasing property taxes.
Both statements can be true.
Katy is lowering the rate it charges, but because property values have grown, the city can still collect more money. That's why the state-required notice calls it a tax increase.
And there is another wrinkle: Even with the lower tax rate, some Katy homeowners could still pay more in city property taxes if their taxable property values increased.
Council Member Johnston Dietz addressed the confusion during the Sept. 14 City Council meeting after saying he had received about 20 phone calls about the property tax notice.
“Let me be clear. The City of Katy is discussing lowering the property tax rate. We're not talking about raising the property tax rate,” Dietz said.
Why does the notice call it a tax increase?
Katy's current property tax rate is 42.5 cents per $100 of taxable value. The city is proposing to lower it by half a cent to 42 cents.
So the tax rate is going down.
But property values have grown. That means Katy can charge a lower rate and still collect more property tax revenue. That's why the state-required notice calls it a tax increase.
“You may have seen a notice referencing a tax increase,” Dietz said. “That language can be confusing, so here's the important distinction. The tax rate is going down, but the total City property tax revenue, keyword being revenue, is increasing because Katy is growing.”
Could your city tax bill still go up?
Yes. That's because Katy City Council sets the city's tax rate, but it does not determine the taxable value of your home.
Consider a home with a taxable value of $400,000.
At Katy's current 42.5-cent rate, the City of Katy property tax would be $1,700.
If the home's taxable value stayed at $400,000 and Katy lowered the rate to 42 cents, the city tax would fall to $1,680, a savings of $20.
But if the home's taxable value increased to $420,000, the tax at the lower 42-cent rate would be $1,764.
In that example, the tax rate went down, but the city tax bill went up by $64 because the property's taxable value increased.
Put simply: The appraisal district determines the property's taxable value. Katy City Council determines the city's tax rate. Both determine how much you pay the city.
The proposed 42-cent rate has not yet been adopted. City Council is scheduled to consider the 2026-27 budget and property tax rate at 6:30 p.m. Sept. 28 at Katy City Hall, 901 Avenue C.
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