Circuit Breaker Cap

Beginning in 2024, certain real property valued at $5,000,000 or less will have a 20-percent limitation on the net appraised value of the property used to calculate property taxes. Properties already receiving a homestead exemption are not eligible and will continue to receive the standard 10-percent limitation on their net appraised value. Other properties that are not eligible for this limitation include: agricultural land, timber land, restricted timber land, recreation parks, scenic land, and public access airport property.

This limitation referred to as a “circuit breaker” in the Texas Property Tax Code limits the amount to which the Appraisal District can increase your property value. The appraised value of qualifying real property is limited to an increase of no more than 20 percent per year unless new improvements, excluding ordinary maintenance, have been made.

The circuit breaker takes effect on January 1 of the tax year following the first tax year in which the owner owns the property and expires on January 1 of the first tax year that the owner no longer owns the property. If you owned your property as of January 1, 2023, and your property qualifies for the circuit breaker, you will receive the benefit of this circuit breaker in 2024. If your property qualifies for the circuit breaker limitation, the notice of appraised value will state two values:

• the circuit breaker cap value (net appraised value used to calculate property taxes); and
• the market value, which is the true value of the property.

For example, if the appraised value of your qualifying real property was $1,000,000 last year, and this year the Appraisal District appraises your property at $1,250,000, with no new improvements or additions being made to the property since last year, the circuit breaker value is calculated as follows:

• $1,000,000 X 20% = $200,000 + $1,000,000 = $1,200,000.

Your taxes will be based on the circuit breaker or net appraised value of $1,200,000; however, the market value of your property will remain at $1,250,000.

Should you sell your property, the limitation on its appraised value will be removed, and the tax base will increase to the market value until the new owner is eligible for the same benefit.

The appraised value that the circuit breaker applies to on qualifying property was set by the Texas Legislature at $5,000,000 or less for 2024; however, the State Comptroller can increase or decrease the appraised value limit for 2025 and 2026 based on the consumer price index.

The Texas Legislature has currently only authorized the circuit breaker limitation for qualifying properties for the 2024, 2025, and 2026 tax years.

You are not required to submit an application to receive a circuit breaker limitation. The appraisal district will automatically apply and calculate these benefits every year. If you believe your property is eligible for a circuit breaker limitation and did not receive it, you may file a protest involving that issue.

The circuit breaker limitation is codified in Texas Property Tax Code Sections 23.231, 1.12(d), 25.19 (b), (g) & (o), 41.41(a), 42.26(d) and Texas Government Code Sections 403.302(d) & (i).