Allen Markel, REALTOR® · Texas Premier Realty

General

What is a MUD and how much does it add to my tax bill?

Answered by Allen Markel, REALTOR®, Texas Premier Realty ·

Short answer

A MUD, or municipal utility district, is a special taxing district that provides water, sewer, drainage or flood-control facilities and pays for them with bonds repaid from taxes on the property in the district. Its tax rate is added to your county, school and other rates. In Texas, a seller of property in such a district must give the buyer a written notice before the contract is signed. Each $0.10 of district rate per $100 adds $100 a year for every $100,000 of taxable value.

Texas Water Code Sec. 49.452 describes the districts covered by the seller's notice: districts created under the Water Code or a special act whose principal function is providing water, sanitary sewer, drainage and flood control or protection facilities, financed or proposed to be financed with bonds payable from the district's taxes or by a standby fee. It also covers districts governed by Local Government Code chapter 375. A district covers less than all the territory in at least one county, and if it is inside a city it covers less than 75 percent of the city.

In plain terms, a developer builds the streets and utilities for a new neighborhood, the district issues bonds to pay for them, and homeowners in the district repay those bonds through the district's property tax. Our registry lists 1,617 districts in the Houston region, as of August 9, 2026, though that count is our own database, not an official state total.

The district's rate is one more line in the combined rate the Comptroller describes: taxable value times the rate set by each unit. The notice a buyer receives states the district's tax rate, so that is where to look for the number for a specific house. I am not publishing a typical MUD rate on this page because our data pull returned no district rate table for this draft, and a rate from memory would be a guess.

What I can give you is the arithmetic. Each $0.10 per $100 of district rate is $100 a year for every $100,000 of taxable value, so a rate of $0.50 would be $500 per $100,000, or $1,500 a year on $300,000 of taxable value. Those are illustrations of the formula, not rates for any district.

Before you buy, get the notice, ask for the current tax bill, and compare the total rate, not just the price.

Water Code Sec. 49.452(a-1) says a person who proposes to sell or convey real property in a covered district must give the purchaser the written notice. Under Subsection (f), the notice must be given before the buyer signs a binding contract, either separately or as an addendum or paragraph of the contract. If the contract is made without the notice, the purchaser is entitled to terminate, unless the seller furnishes the notice at or before closing and the buyer elects to close, which is treated as a waiver. The buyer signs the notice or the contract that includes it (Subsection (g)), and a current copy is signed at closing and recorded in the county's deed records (Subsection (h)).

The section does not apply to transfers such as lien foreclosures or transfers by will or probate proceedings. Read your notice carefully, and talk to an attorney if it does not match what you were told.

Amounts and rules change every year. For the most current and accurate answer, contact the county office directly: the appraisal district and the tax assessor-collector of the county where the home sits. For Harris County: the Harris Central Appraisal District (hcad.org, 713-957-7800) for values, exemptions and protests, and the Harris County Tax Assessor-Collector (hctax.net, 713-274-8000) for tax bills and payments. For Fort Bend County: the Fort Bend Central Appraisal District (fbcad.org, 281-344-8623) for values, exemptions and protests, and the Fort Bend County Tax Assessor-Collector (fortbendcountytx.gov/government/departments/tax-assessor-collector, 281-341-3710) for tax bills and payments. For Montgomery County: the Montgomery Central Appraisal District (mcad-tx.org) for values, exemptions and protests, and the Montgomery County Tax Office (mctx.org, 936-539-7897) for tax bills and payments.

Common follow-up questions

How do I know if a house is in a MUD?

The seller must give a written notice about the district before you sign a contract, under Texas Water Code Sec. 49.452. It states the district's information, including its tax rate.

Can I cancel if the seller never gave me the MUD notice?

Water Code Sec. 49.452(f) says the purchaser is entitled to terminate if the contract was made without the notice, but a buyer who closes after receiving the notice at or before closing is treated as having waived that right.

Is a MUD tax the same as an HOA fee?

No. A MUD levies a property tax to repay district bonds. An HOA charges dues under the community's governing documents. Both can apply to the same house, so ask for both.

Sources

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