The End of the Texas Circuit Breaker Property Tax Cap: What’s Next for Property Owners?

Here’s what you need to know about the Texas circuit breaker property tax cap:

• The circuit breaker cap is a program established to cap taxable value increases of non-homestead properties valued under $5 million by a maximum of 20% each year.
• The program is ending because the original legislation only authorized it for the 2024, 2025, and 2026 tax years. The Texas Legislature did not pass an extension.
• Property owners with a circuit breaker cap will potentially see a significant increase in property taxes starting in the 2027 tax year while previously capped values “catch up” to more current market values.
• Gill, Denson & Company can help you protest your property taxes in 2027 and beyond to mitigate the increases from the loss of the 20% cap.

What Is the Circuit Breaker Cap?

In 2023, the Texas Legislative Session enacted a “circuit breaker” program to alleviate property taxes for non-homestead real property owners. A 20% cap was applied to the taxable value of all real property valued at $5 million or less. This means the taxable value of eligible properties may not increase by more than 20% annually. Homesteaded properties, special appraisal land (1-d-1), and business personal property are not eligible as they have their own exemptions and caps.

The State Comptroller was given the ability to change the appraised value limit for 2025 and 2026, increasing or decreasing the $5 million or less requirement. Otherwise, the circuit breaker cap functions similarly to the 10% homestead cap, which you can read more about here.

Why Is the Program Ending?

According to the original legislation in 2023, the circuit breaker program is set to expire at the end of 2026. It was only meant to apply to the 2024, 2025, and 2026 tax years. The Texas Legislature had the option to review the program in 2025 and extend or expand it. Despite several bills being introduced, none of them passed, and the Legislature chose to let it expire.

What Does This Mean for Commercial & Investment Property Owners?

Now that the program is ending, commercial and investment property owners may see an increase on their 2027 tax bill. Ultimately, it depends on the relevant county’s assigned market value for tax purposes as of January 1, 2027. If the value has increased above the level limited by the cap, then it will increase to close the gap. If the value has decreased or is level with the capped value from 2026, there may not be a significant change on the 2027 tax bill.

What’s Next for Property Tax Relief?

Instead of focusing on limiting taxable values, lawmakers are looking at government spending habits and structural reform. Historical data has shown that value caps may not always prevent higher property tax bills and can lead to a disparity in the tax burden between higher- and lower-income property owners. Setting limits on local tax rates has a more direct impact on property tax bills overall and makes it easier for individual property owners to predict savings.

What Can You Do About It?

Property owners looking for relief when the circuit breaker cap ends should seriously consider protesting their property taxes. While lawmakers determine the best route forward, it’s crucial to limit your taxable value as much as possible. As counties reassess based on January 1, 2027, values, you have the right to protest and prove your value should be lower. Your 2027 tax bill may still increase with the loss of the 20% cap, but it doesn’t have to jump quite so high if you can prove otherwise.

Get started with Gill, Denson & Company before your 2027 property tax bill arrives and you see your property value has increased. We can assist you with gathering data for a strong, evidence-backed case that your January 1, 2027 property value should be lower than the county’s assigned value.