Tax Benefits and Incentives for Landowners in Texas

Owning your own land in Texas is a sign of freedom, opportunity, and security. There’s nothing better than living or working on land that is yours. But land ownership can also come with some important financial and tax benefits. 

In fact, Texas has several systems in place that can help you optimize your tax situation, earn extra exemptions, or maximize your land investment. 

Whether you’re thinking about purchasing new acres or you’re a long-time landowner in Texas, here are a few tax benefits and incentives to keep an eye on: 

Property tax savings 

Texas is unique in that it doesn’t charge property taxes at the state level. It’s one of only a handful of states where this is the case. 

Local county governments throughout Texas do retain the power to collect property taxes. But these are usually lower than state-level taxes levied in other states. Check with your Tax Assessor-Collector to determine your property’s value and how much you might owe to your local municipality. 

As an added benefit, Texas also doesn’t have an income tax. So if you purchase land and plan to either build or buy a home there, you can enjoy even more tax savings. 

Tax exemption for protecting wildlife 

Since the mid-1990s, the Wildlife Management Plan Tax Exemption in Texas has provided incentives for landowners to preserve local wildlife and habitat. It carries similar benefits as an agricultural tax exemption. (Land that previously held an ag or timber exemption can be transferred to this program instead.) 

There is no minimum acreage requirement for the wildlife management exemption, unless the tract of land was reduced in size the previous year. 

To qualify for this tax exemption, landowners have to integrate at least three of seven established wildlife conservation practices yearly: habitat control, erosion control, predator control, supplemental water, supplemental food, providing shelter, or census counts.

The deadline each year to apply for the wildlife management exemption is April 30. However, applications are still accepted before late July with a 10% penalty, as long as the information is submitted before appraisal rolls are certified.

In addition to this opportunity for tax exemption, landowners can also add on carbon credits. If you maintain conservation projects on your acres, you could qualify for carbon sequestration programs. Essentially, one carbon credit equals reducing one ton of carbon dioxide in the atmosphere. 

Several voluntary carbon credit programs exist, and it’s important to research which might be best for your unique situation. But these can be a valuable tool to help maximize your land investment and increase profitability.

Low taxes on vacant land 

Even if you don’t plan to build a home or start a farming operation on your acres, you could still benefit from the state’s tax laws. If you haven’t done any work yet to “improve” your property (like building a structure or adding electricity lines), your vacant land will be taxed at an extremely low rate in Texas. Your yearly tax bill on a tract of vacant land may even be in the double digits. 

Meanwhile, the value of that land can continue to increase. Land is a finite resource and can be an important long-term investment and wealth-building tool. The average prices for land in Texas have risen significantly in recent years. So landowners who already have acres in their portfolio can enjoy the benefit of those higher values — while also minimizing their tax bills. 

Homesteading tax exemption

If you own property in Texas and choose to live on it (as your primary residence), you might qualify for a homesteading exemption. This type of tax exemption helps lower the appraised value of your property, thus lowering your tax bill. 

All homestead exemptions are filed through your individual county’s tax appraisal website. Once you file for the exemption, that’s all you have to do: no need to deal with extra paperwork and apply again each tax year.

If you’re looking to start your homesteading journey, there are several types of loans that can help you finance your property. Rural real estate loans can help you purchase your acres, while land improvement capital can help you spruce up the land (by building a new fence, for example, or digging a well for drinking water). 

Many homesteaders also choose to run an agribusiness on their land — from growing cotton or raising cattle to producing timber. Ag loans are available to help finance these types of operations.

Get help from the experts 

If you’re ready to take advantage of the tax benefits and incentives of being a Texas landowner, get started with a land loan, agricultural loan, or other financial service from Texas Farm Credit. Contact our team to determine your best pathway toward land ownership. 

You can also check out our land loan calculator to get an idea of how much land you can afford based on your circumstances and budget.