Katy homeowners opening their property tax notices are finding a confusing message: the city is raising taxes.

Except it isn't.

The City of Katy is proposing to lower its property tax rate from 42.5 cents to 42 cents per $100 of taxable value for fiscal year 2026-27. But because property values across the city have grown, Katy will collect more total revenue at the lower rate than it did last year. Texas law requires the city to label that a "tax increase."

Council Member Johnston Dietz, Ward A, said he fielded about 20 phone calls from confused residents before addressing the issue at the Monday, Sept. 14 City Council meeting.

"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, according to Covering Katy.

The disconnect comes down to two numbers that move independently. The appraisal district sets a home's taxable value. City Council sets the tax rate. Both determine the final bill.

Why the notice says "tax increase"

The city's official notice lists a no-new-revenue rate of about 40.7 cents per $100. That is the rate Katy would need to charge to collect the same dollar amount as last year from the same properties. The proposed 42-cent rate is above that threshold, so state law requires the "tax increase" label even though the rate itself is dropping.

What it means for your bill

The city's taxpayer impact statement pegs the median homestead's city tax bill at $1,552.64 under the proposed rate. That is about $7 less than the current-year bill of $1,559.34.

But homeowners whose property values climbed will likely pay more. Consider a home valued at $400,000. At the current 42.5-cent rate, the city tax is $1,700. If the value stays flat and the rate drops to 42 cents, the bill falls to $1,680. If the home's taxable value rises to $420,000, the bill at the lower rate jumps to $1,764, an increase of $64 over the current year.

The city's official tax notice projects the typical homestead bill will rise $13.87, or 0.85%, because average taxable values are climbing faster than the rate is falling.

What happens next

All five council members voted to propose the 42-cent rate at the Aug. 24 meeting. Mayor Dusty Thiele was present and did not vote. No council member voted against.

City Council will hold a public hearing and consider final adoption of the FY 2026-27 budget and tax rate at 6:30 p.m. Monday, Sept. 28 at Katy City Hall, 901 Ave. C. Residents can speak for or against the rate at that hearing or contact council members beforehand.