If you own a rental house, a vacant lot, or a commercial building in Texas, your Notice of Appraised Value may show two different numbers for this year — a market value and a lower assessed value, with a line labeled "Circuit Breaker Adjustment." That's the circuit breaker limitation at work. It saves many investors real money, but it also changes how a protest works and how savings are measured. Here's what you need to know.
What the circuit breaker is
Section 23.231 of the Texas Tax Code limits how much the appraised value of real property other than a residence homestead can increase each year: no more than 20% over the prior year's appraised value, plus the value of any new improvements. It applies for the 2024, 2025 and 2026 tax years to properties valued at or below a threshold that started at $5 million and is adjusted each year.
It covers the property types the homestead cap doesn't: rental homes, second homes, small commercial properties and land. There are conditions — for example, the limit generally applies once you've owned the property since January 1 of the prior year — so check your notice to see whether an adjustment appears on your account.
Market value vs. the value you're taxed on
Here's a simple example. Say your rental property was appraised at $500,000 last year, and this year the district says its market value is $650,000 — a 30% jump.
| Last year's appraised value | $500,000 |
| This year's market value | $650,000 |
| Circuit breaker limit (+20%) | $600,000 |
| Value you're taxed on | $600,000 |
Even though the market value is $650,000, you're taxed on $600,000. The circuit breaker has already taken care of the first $50,000.
What that means for a protest
Your notice spells out the key rule: when you protest the market value, your taxable value only changes if the market value comes down below the capped value. In the example above:
- Reducing the market value from $650,000 to $620,000 doesn't lower your taxes this year — you're still taxed on the $600,000 cap.
- Reducing it to $560,000 lowers your taxed value by $40,000 — that's a real reduction.
That's why we look at both numbers before filing. A protest still makes sense when the evidence supports a market value under the cap, and the circuit breaker won't be there forever (see below).
The circuit breaker expires after 2026
The limitation is scheduled to expire on December 31, 2026. Unless the Texas Legislature extends it, beginning with the 2027 tax year non-homestead properties will no longer have a 20% annual limit — and properties whose market value has been running ahead of the cap could see their taxable value jump all at once.
If your notice shows a large circuit breaker adjustment, plan for 2027 now: the gap between your market value and your capped value is the increase you could face if the cap lapses. A well-supported protest of the market value becomes far more important in a year with no cap to absorb it.
Questions about your notice?
If you're not sure how the circuit breaker applies to your property, send us your notice and we'll take a look — no obligation. Learn how the overall process works in How to Protest Your Property Taxes in Travis and Williamson County.
Sources
- Texas Tax Code §23.231 — Circuit breaker limitation
- Texas Tax Code §23.23 — Residence homestead 10% limitation
- Texas Comptroller — Property tax protests and appeals
This article is general information, not legal or tax advice for your specific situation.
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