Introduction
In our 2026 survey, 88% of Texas homeowners said their county's property tax process negatively affects them. If you own rental or commercial property, you may have noticed two different values on your Notice of Appraised Value and wondered why.
The answer is likely the circuit breaker limitation, commonly called the Texas 20% appraisal cap. This provision limits how quickly your property's appraised value can rise each year. In this article, we'll explain how the cap is calculated, which properties qualify in 2026, and why it doesn't necessarily lower your tax bill.
Key Takeaways
The circuit breaker limitation caps annual increases in a non-homestead property's appraised value at 20% over the prior year, plus new improvements.
It applies only to non-homestead real property valued at $5,320,000 or less in 2026.
No application is required; your county appraisal district (CAD) applies it automatically.
The cap limits appraised value, not market value or your tax bill. A five-county study found it actually caused a net tax increase.
The limitation expires December 31, 2026 unless renewed by the legislature.
What Is the Texas 20% Appraisal Cap?
The Texas 20% appraisal cap, formally known as the circuit breaker limitation under Tax Code Section 23.231, limits how much the appraised value of non-homestead real property can rise each year. Specifically, your appraised value cannot increase by more than 20% over the prior year, plus the market value of any new improvements.
This functions as a property tax circuit breaker, slowing the rate at which your taxable value grows when market values spike. The keyword is "appraised value." The cap does not freeze your market value; it only limits the value used to calculate your tax bill.
Where did this come from? The limitation was created by Senate Bill 2 during the 88th Legislature's second called session in 2023. Texas voters approved the accompanying constitutional amendment in November 2023.
What counts as "non-homestead"? A residence homestead is property you own and occupy as your primary home, with a homestead exemption on file. Non-homestead property includes rentals, second homes, vacant land, and commercial buildings.
How the 20% Cap Is Calculated
Your capped appraised value equals the lesser of:
The current market value, OR
The prior-year appraised value + 20% of the prior-year appraised value + market value of new improvements
If you haven't added any new improvements, your appraised value can rise by at most 20% per year, even if the market jumps higher. New improvements are added on top of the capped value at full market value.
Worked Example
Consider a rental property appraised at $1,000,000 last year. The CAD now sets the current market value at $1,300,000, a 30% jump. Here's how the cap applies:
Value | Amount |
|---|---|
Prior-year appraised value | $1,000,000 |
20% increase | $200,000 |
New improvements | $0 |
Capped appraised value | $1,200,000 |
Current market value | $1,300,000 |
Value used for taxes (appraised value) | $1,200,000 |
Because the capped value ($1,200,000) is less than the market value ($1,300,000), your Notice of Appraised Value will show both figures. You pay taxes on the lower appraised value, not the market value. This two-value notice is standard for properties benefiting from the cap.
Which Properties Qualify (and Which Don't)
To qualify for the circuit breaker limitation in 2026, your property must meet two criteria:
It must be non-homestead real property.
Its appraised value must be $5,320,000 or less.
The eligibility ceiling is adjusted annually for inflation.
$5,000,000 in 2024
$5,160,000 in 2025
$5,320,000 in 2026.
Properties That Don't Qualify
The following property types are excluded:
Residence homesteads: These receive the separate 10% homestead cap.
Agricultural land (ag-use valuation)
Timberland
Recreational, park, or scenic land
Public-access airport property
Restricted-use timberland
No Application Required
You don't need to file anything. Your CAD applies the limitation automatically when you qualify. Your notice will show both the capped (net appraised) value and the market value.
Resets on Ownership Change
The cap resets to market value when ownership changes. If you purchase a property, the limitation begins building from that market value starting January 1 of the following year.
If you own commercial or rental property, we can help you file a commercial property tax appeal and ensure your valuation is accurate.
The 20% Cap vs. the 10% Homestead Cap
Texas has two appraisal caps, and they apply to different property types. Here's how they compare:
Feature | 10% Homestead Cap | 20% Non-Homestead Cap |
|---|---|---|
Applies to | Residence homesteads | Non-homestead real property |
Annual increase limit | 10% of prior-year appraised value | 20% of prior-year appraised value |
Statute | Tax Code Section 23.23 | Tax Code Section 23.231 |
Value ceiling | None | $5,320,000 (2026) |
Expiration | Permanent | December 31, 2026 |
If you have a homesteaded property, the 10% cap applies, and you are not eligible for the 20% cap. To learn more about homestead benefits, see our guide to the Texas homestead exemption.
Does the Cap Actually Lower Your Tax Bill?
Often, no. The cap limits appraised-value growth, not market value or your tax rate. Your bill can still rise even when the cap applies.
A joint September 2025 study by the Baker Institute and the Texas Taxpayers and Research Association examined five Texas counties: Collin, Harris, Midland, Moore, and Smith. They found $4.2 billion in property value was removed from the tax roll in 2024 as a result of the appraisal cap. However, that represented only 0.4% of total taxable value.
More importantly, the cap led to higher tax rates in all five counties. The net effect across the five counties was a tax increase of $1.4 million. As The Texas Tribune reported, taxes on properties that benefit from the cap fell by $12.8 million, while taxes on properties that don't benefit rose by $14.2 million.
As the Texas Taxpayers and Research Association concluded: "An appraisal cap is not an effective way to reduce property taxes in Texas."
How Much Are You Over Paying?
Why You Should Still Protest Your Non-Homestead Value
If your appraised value is capped, you might wonder why protesting matters. Here's why: the cap only slows appraised-value growth. Your market value keeps rising and is what you protest.
Lowering your market value now protects you in two ways:
When the cap expires: If the legislature doesn't renew the limitation after 2026, your appraised value could jump to full market value in 2027.
When you sell: The cap resets to market value on ownership change. A lower market value means a better starting point for the next owner, which can help your sale.
Most Owners Don't Protest
Texas homeowners left about $3.3 billion in potential property tax savings unclaimed from 2023 to 2025. In 2025 alone, 68% of residential properties did not file a protest.
In our 2026 survey, 54% of Texas homeowners said they have never protested. Of those, 37% didn't know they had the right to. Whether you own a rental, commercial building, or second home, you can protest your Texas property taxes and potentially lower your property tax assessment.
Know Your Deadline
The Texas protest deadline is May 15, or 30 days after your CAD delivered the Notice of Appraised Value, whichever is later. Missing this deadline forfeits your right to protest for the year.
Your Neighbors Might Be Paying Less...
When the Cap Expires
The circuit breaker limitation expires December 31, 2026. Any extension or renewal beyond 2026 is not current law and would require new legislation and likely another constitutional amendment.
If the cap is not renewed, taxable values for non-homestead property could jump toward full market value in 2027. That makes protesting in 2026 especially important. Lowering your market value now gives you a better baseline before the cap potentially disappears.
For a full overview of current and expiring measures, see our 2026 Texas property tax relief guide.
How Ownwell Can Help
We handle non-homestead, commercial, and residential protests end-to-end. Our team manages evidence gathering, filing, informal negotiations, and hearings on your behalf. With contingency pricing, you pay only if you save.
Since 2021, we've won over 240,000 appeals by combining local expertise with proprietary market data analysis. Whether you own a single rental property or a portfolio of commercial buildings, we protest on your behalf so you don't have to navigate the process alone.
Ready to see your potential savings? Start your property tax appeal in about 60 seconds.
Frequently Asked Questions
Does the Texas 20% appraisal cap apply to my property?
It applies to non-homestead real property valued at $5,320,000 or less in 2026. If your property has a homestead exemption or receives special appraisal (agricultural, timberland, etc.), it does not qualify.
Do I have to apply for the circuit breaker cap?
No. Your county appraisal district applies it automatically. If you qualify, your Notice of Appraised Value will show both a capped appraised value and a market value.
What's the difference between the 10% homestead cap and the 20% non-homestead cap?
The 10% cap under Tax Code Section 23.23 applies only to residence homesteads. The 20% cap under Tax Code Section 23.231 applies to non-homestead property. Homesteaded properties receive the 10% cap and are not eligible for the 20% cap.
When does the 20% cap expire?
The limitation expires December 31, 2026 unless renewed by the Texas legislature. Any continuation beyond 2026 is not yet law.
If my value is capped, will my tax bill go down?
Not necessarily. The cap limits appraised value, not market value or your tax rate. A five-county study found the cap actually led to a net tax increase because taxing units raised rates to offset lost revenue.
