Lakeway, Texas
Planning for Lakeway households, where the second half is already in view.
Lakeway’s median resident is 49.8 years old, fifteen years older than Austin’s, and 46.1% of its households earn $200,000 or more. The median home is worth about $841,000 on the south shore of Lake Travis. That is a retirement-income city: Social Security timing, Medicare premium thresholds, the over-65 property-tax stack, and what a lake house passes on.
The situation
An older, wealthier city at the western edge of Travis County
Lakeway sits on the south shore of Lake Travis, about 25 miles west of downtown Austin, with roughly 19,300 residents, a 106-bed hospital (Baylor Scott & White Medical Center–Lakeway), and a city property-tax rate of $0.16964 per $100, lower than West Lake Hills ($0.176783) and less than a third of Austin’s ($0.574017). Most of the tax bill comes from Lake Travis ISD and Travis County, so the exemptions those two units grant matter more than the city’s.
The households here tend to arrive with a career mostly behind them: executives and physicians who moved out to the lake, retirees from other states, owners who sold a business. Their balance sheets share a shape too. A paid-down or paid-off home worth more than the Austin median, retirement accounts that will soon face required distributions, sometimes a pension or deferred compensation from a former employer, and an estate that will be measured against the federal exemption rather than any Texas one.
Why it’s complex
Five Lakeway decisions that compound
Lake Travis ISD exempts 20% on top of the state’s $140,000
Lake Travis ISD grants a local-option homestead exemption of 20% of appraised value, in addition to the $140,000 state exemption and the $60,000 more at 65 or disabled. At the district’s 2025 rate of $1.0397 per $100, the 20% alone is worth about $1,749 a year on a median-value home.
The city rate is $0.16964, and it drops again at 65
Lakeway levies no general homestead exemption, but it exempts $50,000 for homeowners 65 or older, an amount the city council doubled from $25,000 in October 2024. A half-cent of the city’s sales tax is dedicated to property-tax reduction, which is part of why the rate stays low.
The over-65 stack, unit by unit
At 65, three exemptions land in the same year: $60,000 more from Lake Travis ISD plus a ceiling on the school levy, $143,220 from Travis County on top of its 20% general exemption, and $50,000 from the city. On a median home, together they cut about $1,250 from the annual bill. Filing them on time is the whole trick.
Retirement income is federal-only here; Medicare is not
Texas has no income tax, so a withdrawal from an IRA is taxed once, federally. But Medicare premiums are set by income two years back, and a couple whose modified income tops $218,000 pays a higher Part B and Part D premium for the whole year. Withdrawal order and conversion size are how that threshold gets managed.
The IRMAA cliffA home on the lake, and what passes with it
Texas is a community-property state, so at the first spouse’s death both halves of an appreciated lake house can take a new cost basis. There is no Texas estate tax; the federal exemption is $15 million per person in 2026. And a Texas homestead is protected from most creditors at any value, on up to ten urban acres.
How the step-up worksSources: U.S. Census Bureau, ACS 2020–2024 5-year estimates; City of Lakeway, tax rate; Travis Central Appraisal District, 2026 exemption listing by taxing unit; Travis County FY2026 taxpayer impact statement; Texas Comptroller 2025 ISD rate report; Texas Comptroller, homestead exemptions.
Our approach
One plan for the years the paychecks stop
We start from the tax bill, because in Lakeway it is the largest fixed cost after the mortgage is gone. A worked example on a home at the city’s median value of $841,300: Lake Travis ISD’s 20% local exemption removes $168,260, and the state exemption removes $140,000 more, leaving $533,040 of school-taxable value. At the district’s 2025 rate that is about $5,542 a year for the school portion ($533,040 × $1.0397 / $100), versus roughly $7,291 without the local 20%. At 65, the extra $60,000 brings it to about $4,918, and the ceiling holds it there. The city’s share on the same home is about $1,427 ($841,300 × $0.16964 / $100), falling to about $1,342 once the $50,000 senior exemption applies.
Set the income up before it starts
Pension or lump-sum elections, deferred-compensation payout schedules, and the size of any Roth conversions in the years before Medicare, when income two years out sets the premium you will pay.
Draw in the right order
Which account pays for which year, Social Security claiming for a couple with two earnings records, and a withdrawal plan that keeps modified income under the Medicare threshold that matters to you.
Claim the stack, then hold the line
File the over-65 exemptions with Travis CAD the year you qualify, confirm the school-tax ceiling on the next notice, plan required distributions and charitable gifts from the IRA, and keep the estate documents current with Texas community-property rules.
The work
What you’ll work through with us
- Retirement income plan and withdrawal order across taxable, IRA, and Roth accounts
- Social Security claiming for both spouses, including survivor benefits
- Medicare premium planning around the two-year income look-back
- Roth conversion sizing in a no-income-tax state
- Homestead, over-65, and school-tax-ceiling filings with Travis CAD
- Required minimum distributions and qualified charitable distributions
- Titling, beneficiary, and step-up review with your estate attorney
- Investment management built around after-tax income, not just returns
Planning is led by Theo Halbardier, CFP®, CIMA®, CAIA®, the firm’s founder. We are fee-only: no commissions, no product sales. About Theo
Questions
Common questions from Lakeway households
Do you have an office in Lakeway?
We work with Lakeway households by video and, by arrangement, in person. We do not maintain a public office location.
We retired to Lakeway from another state. Can that state still tax our pension or IRA?
Generally not. Federal law (4 U.S.C. §114) bars a state from taxing the qualified retirement income of a former resident, so a pension or IRA distribution paid to you in Texas is not taxable by the state you left. Income that stays sourced there, such as rent from property you kept, is a different matter. Confirm your situation with a tax professional.
What does the homestead exemption actually save on a Lakeway home?
On a median-value home, the state’s $140,000 school exemption is worth about $1,456 a year at Lake Travis ISD’s 2025 rate, and the district’s own 20% local exemption adds about $1,749 more. Travis County’s 20% exemption is worth roughly $632 on the county line. The city does not grant a general exemption; its $50,000 senior exemption saves about $85 a year.
If we downsize within the Lake Travis area at 70, does the school-tax ceiling come with us?
Texas lets the ceiling transfer to a new homestead as a percentage of the old limitation, so the protection carries over rather than starting fresh at the new value. You file a certificate with the appraisal district for the new home. Confirm the details with Travis CAD before you list the house.
Should we do Roth conversions before Medicare starts?
Often the years between the last paycheck and age 63 are the most efficient conversion window a household will ever have, because Texas adds no state tax and Medicare premiums are not yet being set by that income. After 63, each conversion is weighed against the premium tier it could trigger two years later.
How are you paid?
We are fee-only. Our clients pay us directly; we do not earn commissions on products.
Reviewed by Theo Halbardier, CFP® · Updated September 2026 · Figures current for 2026
Tell us where you are.
The first conversation is 30 minutes by video. Bring your questions; no preparation needed.
We work with individuals and families across Lakeway and throughout Texas, meeting by video or in person by arrangement.
Meet with usWe do not maintain a public office at this location; Lakeway is part of the area we serve. Figures reflect law and published rates as of September 2026 and may change.