A Record Tax Hike Could End Austin’s Boomtown Era

By Hannah Frankman Hood

Sunday, November 02, 2025

 

On November 4, Austin residents will vote on whether to adopt a 20.2 percent property tax hike, the largest in the city’s history.

 

It’s an off-year election. Many residents don’t even know the proposal is on the ballot. Supporters are framing the hike as a small, “for-the-public-good” adjustment. But should it pass, the hike could have enormous long-term ramifications for Austin’s place on the national stage.

 

Austin has spent the past decade as one of America’s boomtowns. At the height of Covid, it drew New Yorkers and Californians in droves, competing against Nashville and Miami to attract top talent.

 

Joe Rogan moved to Austin, opened a comedy club downtown, and brought everyone from Bernie Sanders to Donald Trump through as podcast guests. Joe Lonsdale launched the University of Austin. Elon Musk built his Tesla Gigafactory and relocated his business headquarters to Texas.

 

It seemed like everything in Austin was on the rise.

 

But this tax bill gives us a glimpse of a different story: one of progressive policies that have led to homeless encampments downtown, a district attorney who lets violent criminals back onto the streets, and rising taxes that threaten to gut Austin’s competitive economic edge.

 

Austin is running the same playbook as places such as San Francisco and Chicago (cities that people left for the promise of Texas). It’s a few years behind, but if it keeps on this path, its gilded era will be short-lived.

 

The tax hike, on the ballot as Proposition Q, is framed as a manageable $300-per-year increase for the “average homeowner” to “keep up with the costs.” But that $300-a-year price tag can be misleading; average is a loaded term when talking about taxes, as there are a multitude of variables that affect a homeowner’s actual bill.

 

The more important number is the tax rate itself. This year, the City of Austin has a tax rate of $0.4776 per $100 of a property’s taxable value. Next year, if Proposition Q passes, that rate will jump to $0.5740.

 

That means if a family’s home has a taxable value of $500,000, they owe $2,388 in city taxes this year; next year they’ll owe $2,870.09.

 

Property taxes in Austin are already astronomically high. The median property tax bill in Austin, which includes county, school, community college, and district taxes on top of the city assessment, is $8,381 in 2025 — nearly $6,000 more than the national median of $2,400.

 

Most of that has happened over the past decade. According to the Texas Public Policy Foundation, Austin’s property taxes have gone up 118.3 percent since 2015. The average homeowner paid $973 in city taxes in 2015; in 2025 they owe $2,124.35 — and that’s only the city’s portion.

 

Proposition Q won’t hurt just homeowners, of course. Landlords will pass the 20 percent increase on through higher rent, which could raise rates by hundreds of dollars a year.

 

If this all sounds familiar, it’s because it’s been tried before. Take Chicago as an example, where property taxes rose 53.3 percent between 2012 and 2023. In that same period, the city experienced a 12 percent drop in downtown office occupancy rates. While some of this decline is due to Covid’s work-from-home effect, there has also been a wave of corporate relocations, such as finance giant Citadel moving its headquarters from Chicago to Miami.

 

The 53.3 percent property tax hike that’s straining Chicago happened over the course of a decade. Austin’s 20.2 percent proposed spike would be a third of that in just one year.

 

Austin already has a real estate occupancy problem. The downtown skyline has changed dramatically over the past decade, but its new high-rises have struggled to attract tenants. The city’s second-tallest building, Sixth and Guadalupe, was finished in 2023, but nearly all of its 33 office floors remain empty — and it’s not a fringe example.

 

The pattern is predictable. When cities begin to cost more to live in than the value they deliver — be that cost measured in money, safety, or quality of life — people with means move elsewhere, and the city gets caught in a death spiral that’s very hard to escape.

 

Long gone is the Austin real estate boom of 2021, when expats moving from other states were buying houses sight unseen, and where newly listed properties were going under contract in a matter of hours. The market has slowed, and enthusiasm has turned tepid. Higher interest rates have cooled real estate markets nationwide, but Austin has seen a sharper correction. Housing prices are down 9 percent year-over-year, but taxes are still rising.

 

Worse still for Austin’s long-term prospects, small businesses will be hit hardest by a large tax hike. The “keep Austin weird” aesthetic is what made the city famous. If eclectic mom-and-pops and quirky honky-tonks close up shop, what even makes Austin appealing against Dallas or Houston, let alone Nashville or Miami or anywhere else?

 

City officials say the tax hike is needed to close a $33.4 million deficit in their $6.3 billion budget. But the hike would raise nearly $110 million — more than three times the required amount.

 

A total of $15.5 million is earmarked for “housing affordability” (ironic when the tax hike will make housing more expensive), and $51.5 million will be allocated to homelessness services, an issue that most residents agree needs addressing. But some of the numbers — including $8 million earmarked for the operation of a single 300-bed emergency shelter — have residents calling for an audit of the city’s spending rather than an increased tax burden.

 

Perhaps as confirmation of that sentiment, Texas Attorney General Ken Paxton is investigating two nonprofits donating to the Proposition Q campaign for allegedly breaking conflict-of-interest laws.

 

Cities don’t have an incentive to manage budgets well. If there’s a deficit, it’s easier to initiate a tax increase than to cut costs. With layers of bureaucracy separating cause from effect, there’s no guarantee that money will be spent wisely — and no reason for the city council to refrain from raising taxes again in future years.

 

Austin has boomed for the past decade because of its allure. It’s cheaper than New York, it’s cleaner than San Francisco, it’s safer than Chicago.

 

But it would do city officials well to remember: Austin is full of transplants, people who left their dying cities to find a better one. If they weren’t too tethered to their home states to leave, they certainly aren’t tethered to Austin.