How penalty and interest work
Two separate charges are added to unpaid property taxes: penalty and interest. Penalty is a one-time percentage that increases in steps each month. Interest is a monthly compounding rate. Together they represent the cost of paying late; the longer the delay, the higher the total.
Penalty schedule
- February 1: 6% penalty, 1% interest.
- March 1: 7% penalty, 2% interest.
- April 1: 8% penalty, 3% interest.
- May 1: 9% penalty, 4% interest.
- June 1: 10% penalty, 5% interest.
- July 1: 12% penalty, 6% interest, plus a separate 15% to 20% attorney collection fee that may apply.
- August 1 and later: 12% penalty, interest continues to accrue at 1% per month.
How to stop penalty and interest from growing
Any payment applied to the account stops interest from accruing on that portion of the balance. Paying the full past-due amount, including all accrued penalty and interest, ends the accrual entirely. If you cannot pay in full, an installment plan can freeze the penalty schedule for the covered portion of the balance.
Waivers
Penalty and interest are generally not waived. Very limited exceptions exist under Texas law for uniformed service members on active duty during the delinquency period and for a few narrowly defined circumstances. Contact the Tax Office if you believe an exception applies to your situation.