Lowest Tax Rates in South
(Because your mortgage payment already has enough opinions.)
When people talk about affordability in South Austin, most of the focus goes to home prices and interest rates. Both matter. But the silent assassin of your monthly payment is something way less exciting.
Property taxes.
In South Austin, the average tax rate hovers right around 2%. That might not sound dramatic until you realize that a small difference in tax rate can mean thousands of dollars a year. And unlike interest rates, you don’t get to refinance your tax rate.
Why Some Neighborhoods Are More Expensive Than Others (Even With Similar Prices)
One of the biggest reasons tax rates vary is whether a neighborhood has a Municipal Utility District, commonly known as a MUD.
A MUD is a third-party entity that finances and maintains infrastructure like roads, water lines, drainage, and utilities. Instead of the city fronting that cost, the MUD does, and homeowners pay it back through property taxes, plus interest.
MUDs are extremely common with new construction, especially on the outskirts of Austin. Infrastructure costs have skyrocketed over the last decade, and builders lean on MUDs to make projects financially possible.
Now here’s the important nuance.
Older neighborhoods with MUDs tend to feel very different than brand-new ones.
Take Shady Hollow for example. It has a MUD, but the community is mature. Most of the infrastructure has already been paid down, so the impact on taxes is much smaller than what you’d see in a brand-new development. It’s not zero, but it’s not the scary version people think of when they hear “MUD.”
If Taxes Matter, These Neighborhoods Deserve a Look
If you are getting closer to retirement, living on a fixed income, or just trying to keep your monthly payment as low as humanly possible, tax rate matters more than almost anything else.
Hills of Bear Creek
This one surprises a lot of people. Tax rate is around 1.6%, which is one of the lowest I have seen in South Austin, especially for homes under $500,000. Quiet, tucked away, and very friendly to your monthly budget.
Lewis Mountain Ranch
If you are shopping at a higher price point and looking for a forever home, this one is hard to beat. Tax rate around 1.5%, but homes typically sell north of a million dollars. Low tax rate, higher purchase price, different math, same principle.
Circle C and most of Southwest Austin
Generally sits between 1.8% and 2.2%, depending on the specific section. Not the cheapest, not the worst, and very predictable.
Why Taxes Jumped So Much After 2022
Texas is technically a non-disclosure state, meaning sales prices are not publicly recorded. But that doesn’t stop cities from estimating value. In 2022, when the market escalated aggressively, assessed values jumped with it.
A lot of homeowners saw property taxes increase by $2,000 to $5,000 per year almost overnight. Not because they did anything wrong, but because assessed values exploded.
The city’s assessed value impacts your property taxes more than anything else. That is why starting with a lower tax rate neighborhood can soften the blow long term.
The Takeaway
You can’t control interest rates. You can’t control city assessments.nBut you can choose where you buy.
Buying in a lower tax rate community is one of the most underrated ways to protect your monthly payment and your long-term affordability. Especially in South Austin, where the difference between neighborhoods can quietly cost you thousands every year.
If you want help comparing tax rates, neighborhoods, and what actually makes sense for your situation, that’s exactly the kind of thing I help clients navigate every day. Because buying a great house is nice, but keeping your payment livable is legendary.
