You opened your Notice of Appraised Value from HCAD and saw four different numbers attached to your property. Market value. Appraised value. Assessed value. Something about a cap. They all sound like the same thing, but they are not — and the difference between them is exactly where your tax bill gets determined.
The 4 Terms That Matter
1. Market Value
What it is:
The price the Harris County Appraisal District (HCAD) believes your property would sell for on the open market as of January 1 of the tax year.
What it means for your taxes:
This is the starting point. HCAD sets this number using recent sales in your neighborhood, property characteristics, and mass appraisal models. Everything else flows from here.
Common misconception:
"Market value on my notice is what my house would actually sell for." Not necessarily. HCAD's market value is their estimate based on mass appraisal. It can be higher or lower than what a buyer would actually pay. Real estate agents and appraisers may arrive at a different number entirely. In Texas, CAD market values frequently diverge from actual sale prices.
2. Appraised Value
What it is:
The value HCAD assigns to your property for tax purposes. For most residential properties, this equals the market value. But if you have agricultural or other special-use exemptions, or if HCAD makes adjustments, the appraised value can differ from market value.
What it means for your taxes:
This is the number you protest. When you file a protest, you are arguing that the appraised value is too high. If the appraisal district or the Appraisal Review Board agrees, this number comes down.
Common misconception:
"Appraised value and market value are the same thing." For most homeowners they happen to match, which is why people conflate them. But they are legally distinct concepts. Your appraised value can never exceed your market value, but it can be lower due to exemptions or special valuations.
3. Assessed Value (aka "Cap Value")
What it is:
If you have a homestead exemption, Texas law limits how much your assessed value can increase each year — a maximum of 10% over the prior year's assessed value. The assessed value is the number your taxes are actually calculated on, after this cap is applied.
What it means for your taxes:
This is the number that directly determines your tax bill. Your tax rate gets multiplied by your assessed value (minus any exemptions) to produce what you owe. Even if HCAD raises your appraised value by 30%, your assessed value can only go up 10% from last year.
Common misconception:
"The 10% cap means my taxes can only go up 10%." The cap limits the assessed value increase, not the tax increase. If your local taxing entities also raise their tax rates, your total tax bill can increase by more than 10% even with the cap in place.
4. Taxable Value
What it is:
Your assessed value minus any exemptions you qualify for (homestead exemption, over-65, disabled veteran, etc.). This is the final number that gets multiplied by the tax rate.
What it means for your taxes:
A standard homestead exemption removes a flat dollar amount from your assessed value before taxes are calculated. If your assessed value is $297,000 and you have a $140,000 homestead exemption for school taxes, you only pay school taxes on $157,000.
Common misconception:
"I filed for homestead so my whole value is protected." The homestead exemption reduces your taxable value by a fixed amount — it does not eliminate your tax bill or cap your value at what you originally purchased the home for.
How They Flow Together
Here is how these four values connect to produce your tax bill:
Market Value
HCAD's estimate of sale price
Appraised Value
Usually equals market value for homes
Homestead Cap Applied: max 10% increase over prior year
Assessed Value
The capped number
Minus Exemptions: homestead, over-65, etc.
Taxable Value
× Tax Rate from each taxing entity
Your Tax Bill
The key insight: you can only protest the top of this chain. You challenge the appraised value. The cap, exemptions, and tax rates are set by law or by your local taxing entities. You cannot protest those.
Want to see your actual numbers?
Our free scorer tool shows your assessed value, $/sqft, and how you compare to neighbors — in 30 seconds.
Check Your Property FreeWorked Example: A Hypothetical Harris County Home
Let's walk through a realistic scenario to see how all four values work together.
The property: A hypothetical 2,100 sq ft home in a Harris County subdivision. The homeowner has a homestead exemption and has owned the home for several years.
| Step | What Happens | Amount |
|---|---|---|
| Market Value | HCAD estimates what the home would sell for based on comparable sales in the neighborhood | $350,000 |
| Appraised Value | HCAD sets this slightly below market value based on property condition adjustments | $320,000 |
| Prior Year Assessed | Last year's capped value (already on file) | $270,000 |
| Current Assessed | The 10% cap kicks in: $270,000 × 1.10 = $297,000. Because $297,000 is less than the $320,000 appraised value, the cap saves the homeowner here | $297,000 |
| Taxable Value | For simplicity, we'll use the assessed value before entity-specific exemptions | $297,000 |
| Tax Rate | Combined rate across all taxing entities (county, school district, MUD, etc.) | ~2.3% |
| Tax Bill | $297,000 × 0.023 | ~$6,831 |
What the cap did in this example: Without the homestead cap, taxes would have been calculated on $320,000 (the appraised value), producing a bill of roughly $7,360. The 10% cap reduced the taxable basis by $23,000 and kept approximately $529 in the homeowner's pocket.
What a successful protest could do: If this homeowner protested and got the appraised value reduced from $320,000 to, say, $290,000, it would not change the current year's tax bill at all — because the capped assessed value of $297,000 is already below $290,000's cap path. But it would help in future years by narrowing the gap between the appraised and assessed values. That gap matters because it represents stored increases that can compound over time.
Four Things People Get Wrong
Myth 1: "My appraised value went down, so my taxes should drop too."
Not automatically. If there is a gap between your appraised value and your assessed (capped) value, a decrease in appraised value might not reach your assessed value at all. Your taxes are calculated on the assessed value, not the appraised value. Until the appraised value drops below the assessed value, a reduction in appraisal does not change your bill. However, closing that gap still matters for future years.
Myth 2: "Market value on my notice equals what I could sell my house for."
HCAD uses mass appraisal models to estimate market value for over a million properties at once. They are not doing a personal appraisal of your home. Their number can be higher or lower than what a buyer would actually pay. If your home has deferred maintenance, unusual features, or sits on a busy road, the CAD's market value may overstate what a real buyer would offer. That difference is one basis for a protest.
Myth 3: "I can protest my tax rate."
You cannot. The tax rate is set by each taxing entity (school district, county, city, MUDs, hospital district, etc.) through their own budget and public hearing process. What you can protest is the value HCAD places on your property. Lower value, same rate, lower bill.
Myth 4: "Protesting will flag my property and raise my value next year."
This is the number one reason homeowners skip protesting, and it is false. Texas law prohibits raising a property's value solely because the owner filed a protest. HCAD reappraises every property annually using the same mass appraisal methods regardless of whether you protested. The worst possible outcome of a protest is that the appraised value stays exactly the same. There is no downside.
Glossary of Secondary Terms
NOAV (Notice of Appraised Value)
The annual notice HCAD mails to property owners, usually in April, showing the proposed values for the upcoming tax year. This notice is your starting gun — it tells you what HCAD thinks your property is worth and triggers your deadline to file a protest.
iFile
HCAD's online system for filing a property tax protest electronically. Available at owners.hcad.org. You'll need your property account number and iFile number (found in the upper right corner of your Notice of Appraised Value). First-time users who lost their notice can retrieve their iFile number at features.hcad.org by scanning their Texas driver's license.
iSettle
HCAD's online informal settlement tool. After you file a protest, HCAD may offer you a reduced value through iSettle before a formal hearing. There is no counter-offer mechanism — it is accept or reject only. You can accept or reject the offer up to the day before your formal ARB hearing, typically giving you about 3 weeks to decide.
ARB (Appraisal Review Board)
An independent panel of citizens that hears property tax protests when the homeowner and HCAD cannot reach an agreement informally. The ARB conducts formal hearings and issues binding decisions on value disputes. Hearings are typically 15 minutes and conducted via Cisco WebEx videoconference or in person at the HCAD building.
Equity Argument
A protest strategy where you argue that your property is appraised higher than comparable properties in your area. Even if HCAD's value is close to actual market value, if similar homes nearby are appraised for less, you can argue that your assessment is unequal. Texas law allows this as a separate ground for protest.
Homestead Exemption
A tax benefit available to Texas homeowners who use their property as their primary residence. It provides a $140,000 reduction in taxable value for school district taxes (increased from $100,000 in November 2025 via Proposition 13) and caps annual assessed value increases at 10%. Seniors and disabled homeowners receive an additional $60,000, for a total school tax exemption of $200,000. You must apply for it — it is not automatic.
Comparable Properties (Comps)
Properties similar to yours in size, age, condition, and location that are used to support or challenge an appraised value. In a protest, you present comps that sold for less (or are appraised for less) than your property to argue that your value should be reduced.
Dollar Per Square Foot ($/sq ft)
A common metric for comparing property values. Calculated by dividing the appraised or sale value by the total living area. If your home is valued at $160/sq ft but similar homes in your neighborhood are appraised at $140/sq ft, that gap can support a protest.
Key Dates to Remember
The valuation date. HCAD determines your property's value as of this date each year.
NOAVs are mailed out (typically).
Deadline to file your protest (or 30 days after your NOAV is delivered, whichever is later). Miss this and you lose your right to challenge this year's values.