What Happens When the Texas 20% Appraisal Cap Expires in 2027

The Texas 20% appraisal cap expires December 31, 2026. If you own non-homestead property in Texas, 2027 could bring a significant increase to your property tax bill. This provision, the circuit breaker limitation, is also known as the Texas 20% appraisal cap. Once it ends, 2027 is the first year your value can climb back toward full market value.

Key Takeaways

• The circuit breaker limitation (the 20% cap) on non-homestead real property is set to expire December 31, 2026, under Texas Tax Code Section 23.231.

• Capped appraised values can rise toward full market value in the 2027 tax year, creating a potential single-year jump.

• The Texas Legislature did not renew the 20% appraisal cap during its 2025 session. Thus, any extension or significant change would require the Legislature, which next convenes in January 2027, and likely another constitutional amendment.

• Lowering your market value through a 2027 property tax protest shrinks the baseline your 2027 value builds from.

What the Texas 20% Appraisal Cap Covers and When It Expires

The 20% appraisal cap is a temporary shield on how fast a county can raise the appraised value of non-homesteaded properties. It expires on December 31, 2026, and applies only to tax years 2024, 2025, and 2026.

The circuit breaker limitation caps annual appraised-value increases at 20% for non-homestead real property and adjusts for inflation. 

This is a separate protection from the 10% homestead cap under Section 23.23, which is not expiring.

The provision comes from Texas Tax Code Section 23.231, created by Senate Bill 2 (88th Legislature, 2023). Texas voters confirmed it with a constitutional amendment in November 2023. Lawmakers built it as a temporary experiment, with a hard December 31, 2026 sunset written into the text. 

The cap covers second homes, rentals, land, and commercial buildings. However, it does not cover agricultural land, timberland, personal property, or anything above the (2026) $5.32 million threshold.

For the full mechanics, see our existing guide on how the Texas 20% appraisal cap works for non-homestead property. 

What Happens to Your Property Taxes in 2027 if the Cap Expires 

The core risk is that the cap only slowed the growth of your appraised value. Market value kept rising underneath it. If the cap lapses, your appraised value can reset toward that higher market value in 2027, and your bill can jump significantly in a single year.

This is why the two values on your Notice of Appraised Value matter. 

Your appraisal district records two values on qualifying property: the capped appraised value your taxes are based on, and the market value underneath it. Once the cap lapses, the appraised value can move to market.

To size your exposure, pull your property's account on your county appraisal district site and subtract the capped value from the market value. That difference is the minimum catch-up your appraised value faces in 2027. It could be more, since the district sets a fresh market value as of January 1, 2027.

For many owners, that gap is zero. The cap only bites in years when market value grew more than 20%, and growth has been well below that in most Texas markets since 2022. If you bought the property after January 1, 2025, you never had a cap.

Consider two Harris County non-homestead properties evaluated under Harris County's median effective rate of 1.49%. 

• Scenario A shows a modest single-year gap where market value barely outstripped capped value

• Scenario B illustrates a compounded multi-year gap where rapid market growth accumulated over three years.

If the cap lapses in 2027 and both values reset to market, the comparison illustrates the potential tax exposure:

Note that the single-year exposure figures represent potential tax increases based on baseline valuations, not definitive bill forecasts. While district-wide increases in appraised value force taxing units to compress tax rates under Tax Code Chapter 26, your overall bill will still rise if your individual share of the local tax burden expands relative to neighboring properties that experienced less market appreciation.

The compounding effect makes this worse than a one-time event. The cap held your taxable value below market for up to three years. So the reset is not a single 20% step; it can close the entire accumulated gap at once. It’s rare, but an owner who saw the maximum increase each year since 2024 could face the largest correction.

The rate side matters too. In the example above, we held the rate flat at 1.49%, but local taxing units set new rates every fall. If your county raises its rate in the same year values reset, your bill absorbs both changes at once.

Did the Cap Even Help? What the Data Shows

The cap limits how fast your appraised value grows, not your tax rate or your county's total levy. Many taxing units raise rates to keep revenue the same. 

Evidence from the Baker Institute and Texas Taxpayers and Research Association reviewed five counties: Collin, Harris, Midland, Moore, and Smith. Their 2025 study found that $4.2 billion was pulled from the 2024 tax roll; about 0.4% of the taxable value would’ve been realized without the 20% appraisal cap. 

Across the five counties, that produced a net tax increase overall as rates rose to offset the lost value. However, taxes on properties benefiting directly from the cap actually fell by $12.8 million, while taxes on non-covered properties rose by $14.2 million. As an owner of an eligible non-homestead property, you fall into the first group and did experience individual savings.

In other words, the cap shifted taxes rather than cutting them. When appraised values are held down, but budgets are not, taxing units simply set a higher rate to collect the revenue they planned for. The math nets out against property owners.

This interpretation changes how you should read 2027. The expiration is less a loss of savings than a return to taxing full value.

The value on your notice never kept your bill in check. A correct market value is the only number a protest can move, not a temporary cap, because that is the number a protest can actually move.

Will Texas Replace the Expiring 20% Cap With a Stricter, Permanent One?

Rather than simply extending the temporary 20% circuit breaker under Section 23.231, state leadership is considering broader structural reforms that could reshape property tax limits entirely. Instead of renewing the expiring provision as written, proposals focus on introducing a stricter, permanent cap framework.

Governor Greg Abbott’s proposal directly addresses non-homestead and commercial real estate by introducing a five-point plan:

• 3% Appraisal Cap Across All Property Types: Lowers annual appraisal growth limits to 3% and expands coverage to all property types, including rental, commercial, and non-homestead properties.

• Local Spending Limits: Establishes a local spending cap tied to population growth plus inflation or 3.5%, whichever is lower.

• Voter Mandates for Tax Increases: Requires a two-thirds voter approval threshold for future local tax increases and empowers voters with a 15% petition threshold for rollback elections.

• Elimination of School Property Taxes: Shifts full school funding responsibility to the state to eliminate school district property taxes.

Meanwhile, Lieutenant Governor Dan Patrick’s "Operation Double Nickel" proposal approaches relief by focusing on homesteads. It raises the general homestead exemption from $140,000 to $180,000 and lowers the senior exemption age threshold from 65 to 55.

Because the Texas Legislature convenes its 90th regular session in January 2027—after the 20% cap expires on December 31, 2026—property owners should prepare for an initial uncapped reset unless lawmakers enact retroactive measures or pass new legislation early in the session.

How to Protect Yourself After the Cap Expires (2027 Action Plan)

With the 2026 protest deadline now past, your primary focus shifts to preparing for the 2027 assessment cycle. When the 20% appraisal cap officially expires on December 31, 2026, county appraisal districts will value your property at full market value. 

Winning a reduction in 2027 helps by correcting property records, establishing favorable comparable data, and setting a lower starting point for future market-value assessments rather than relying on a statutory baseline carryover or the Texas legislature to expand the 10% appraised value cap to non-homestead properties and lower it to 3%.

Here are four key steps to take as you prepare for the upcoming 2027 tax season:

1. Review your 2027 Notice of Appraised Value: When county appraisal notices arrive in spring 2027, compare the new market value assessment against your prior year’s capped value to see the full impact of the reset.

2. Prepare to protest by May 15, 2027: Plan to file your 2027 Texas property tax protest by May 15, 2027 (or 30 days after receiving your notice). Preparing early will give you maximum leverage during informal negotiations.

3. Gather recent market evidence for market value and equal & uniform protests: Compile 2026 and early 2027 sales comps and equity data. Alongside a standard market value protest under Texas Tax Code Section 41.41(a)(1), property owners can file an equal and uniform protest by identifying comparable properties that are assessed more favorably.

   1. An equal-and-uniform protest allows you to challenge unfair assessments even when market data is limited or disputed. If administrative appeals do not reach a fair resolution, these disputes can be appealed further to district court under Texas Tax Code Sections 42.25 and 42.26.

4. Audit for valuation errors: Ensure the appraisal district has correctly classified your property characteristics and hasn't overvalued your property now that the cap safety net is removed.

How Ownwell Can Help CRE Owners and SFIs

When you protest with Ownwell, we manage the process end to end for non-homestead, commercial, and residential properties. Our local experts and proprietary market data build your evidence, file the paperwork, and handle informal negotiations. We also represent you at Appraisal Review Board (ARB) hearings, so you never have to prepare a case yourself.

Our results back it up:

• 88% success rate: the share of protests our customers win.

• $774 in average annual savings: the typical amount our customers keep each year.

• Over 1 million property tax appeals processed: We have handled more than a million cases, experience that sharpens the comps and arguments we bring to your hearing.

• 4.7 rating across 3,000+ reviews: how our customers rate the service.

We handle Texas property tax protests on a 25% contingency, with no upfront cost, so you pay only if we save you money. 

If you hold more than one property, we support portfolios on a single sign-up path. Investors managing rentals or commercial buildings can protest across every parcel at once. Start your appeal with zero upfront cost.