Travis Bunn

Founder, AppealDesk · Published February 25, 2026

How Much Can Property Taxes Increase in Texas? (2026 Guide)

Updated July 2026 · 8 min read

In Texas, homestead property taxes can increase by a maximum of 10% per year on the assessed value. This cap protects primary residences from runaway appraisal increases, but it doesn't apply to all properties. Non-homestead real property under an indexed value threshold ($5.32 million for 2026) has a temporary 20% "circuit breaker" cap through the 2026 tax year, while properties above that threshold face no assessment cap at all.

Can Texas Property Taxes Increase Every Year?

Yes. Texas appraisal districts revalue property every year, and there is no rule that keeps your value or your bill flat from one year to the next. What Texas does have is a set of limits on how fast things can grow: a homestead's assessed value can rise at most 10% per year, qualifying non-homestead property is capped at 20% per year through 2026, and local tax rates face state-imposed election triggers if they grow too fast.

So your taxes can go up every single year, and for many homeowners they do. The caps control the pace, not the direction. That said, 2025's exemption increases actually pushed many homestead bills down; more on that below.

What Is the Maximum Property Tax Increase in Texas?

The maximum annual increase depends on the property type. For a homestead with the exemption on file, assessed value can rise at most 10% per year plus the value of new improvements. For non-homestead real property under the indexed circuit-breaker threshold, the maximum is 20% per year through 2026. For property above that threshold, there is no maximum: assessed value can jump to full market value in a single year. And remember, these caps limit assessed value, not the tax bill itself, which also depends on the rates your local taxing units adopt.

What Changed for 2026: Bigger Exemptions and the Circuit Breaker's Final Year

If you're asking whether Texas property taxes went up in 2026, the honest answer is: for many homesteads, the bill actually went down. In November 2025, Texas voters approved a slate of constitutional amendments (all 17 on the ballot passed, and the property tax measures drew at least 83% approval) that took effect for the 2025 and 2026 tax years:

• Prop 13 (SB 4): The school-district homestead exemption jumped from $100,000 to $140,000, retroactive to the 2025 tax year. Homeowners saw reduced 2025 bills or refunds.
• Prop 11 (SB 23): The additional school exemption for homeowners 65 and older or disabled rose from $10,000 to $60,000, letting qualifying seniors exempt up to $200,000 combined.
• Prop 9 (HB 9): The business personal property exemption rose from $2,500 to $125,000, effective January 1, 2026.

The other big 2026 story is the 20% circuit breaker cap on non-homestead property. It is scheduled to expire on December 31, 2026 unless the Legislature renews it. If it lapses, rental homes, second homes, and small commercial properties go back to having no assessment cap at all starting in 2027.

What Is the Property Tax Rate in Texas for 2026?

There is no single Texas property tax rate, and there is no state property tax at all. Every dollar you pay is levied locally. Your combined rate is the sum of the rates adopted by the taxing units that overlap your address: usually a school district, a county, a city, and often a hospital district, community college district, or municipal utility district. Two homes a mile apart can sit under different combinations and pay noticeably different rates on the same value.

Rates for the 2026 tax year are adopted by each unit in late summer and posted on your county's truth-in-taxation site, along with the no-new-revenue rate and the voter-approval rate for comparison. That site, not a statewide average, is the only place to get the rate that actually applies to your property. The illustrative 2% combined rate used in the examples below is a round number for arithmetic, not a published average.

One thing worth knowing about direction: adopted rates in many Texas jurisdictions have come down since the 2019 reforms, because school district maintenance-and-operations rates have been compressed by state funding and because cities and counties now face an automatic election above 3.5% revenue growth. A falling rate on a rising value can still produce a higher bill, which is why the assessed value on your notice deserves scrutiny even in a year when your rate drops.

The 10% Homestead Cap: What It Means

Texas Tax Code Section 23.23 limits the annual increase in assessed value for qualified homestead properties to 10% plus the value of any new improvements. This cap takes effect on January 1st following the year you first qualify for the homestead exemption.

Here's how it works: if your home's assessed value was $300,000 last year, the appraisal district can raise it to a maximum of $330,000 this year (10% increase), even if the market value has soared to $400,000. The homestead cap creates a "capped value" that grows more slowly than market value in hot real estate markets.

What the Cap Doesn't Protect

The 10% cap only limits assessed value increases. It does not cap:

• Tax rate changes: Your city, county, or school district can still raise rates, though state law now limits how far. Since 2020, a city or county that raises maintenance-and-operations revenue more than 3.5% triggers an automatic voter-approval election (SB 2, 2019), and school district levy growth is held to roughly 2.5% (HB 3, 2019)
• New construction: Adding a pool, garage, or finishing a basement adds full market value on top of your capped value
• Your actual tax bill: A 10% assessed value increase plus a 5% tax rate increase = roughly 15% higher taxes

Many Texas homeowners are surprised when their tax bill increases by more than 10% despite the cap. The culprit is usually rising rates or debt levies from local jurisdictions funding schools, roads, and municipal services. Learn more about how to appeal property taxes in Texas if your assessment feels unfair.

The 20% Circuit Breaker Cap on Non-Homestead Property

Starting January 1, 2024, Texas introduced a first-of-its-kind "circuit breaker limitation" (Tax Code Section 23.231, part of the 2023 SB 2 package) capping assessed value increases for non-homestead real property at 20% annually. The value threshold is indexed each year: $5 million for 2024, $5,160,000 for 2025, and $5,320,000 for 2026. You must have owned the property for one full calendar year before the cap kicks in. This temporary program runs through the 2026 tax year and applies to:

• Second homes and vacation properties
• Rental properties (single-family, duplexes, apartments)
• Small commercial real estate (retail, offices, warehouses under the indexed threshold)
• Business-owned properties not eligible for homestead exemption

Before this program, non-homestead properties had no cap at all: appraisers could increase values by 30%, 50%, or even 100% in a single year if market data supported it. The 20% cap provides modest relief for landlords and small business owners, but it's still double the homestead cap and set to expire December 31, 2026 unless the Legislature extends it.

Who Doesn't Get the 20% Cap

Properties valued above the indexed threshold ($5.32 million for 2026), typically large apartment complexes, shopping centers, office towers, and industrial facilities, remain subject to unlimited annual increases. These properties can see assessed values jump 40%, 60%, or more in hot markets, making regular appeals critical for owners. For high-value commercial properties, working with a professional firm like AppealDesk often makes financial sense given the stakes involved.

How Market Value vs. Assessed Value Works

Understanding the difference between market value and assessed value is crucial for Texas property owners:

For example: your home's market value might be $500,000, but if you've owned it for 10 years with the homestead cap in place, your assessed value might only be $380,000. You pay taxes on the $380,000 figure, saving you thousands of dollars annually. This "hidden equity" is one of the biggest financial benefits of Texas's homestead cap system.

What Happens When You Sell or Refinance

The homestead cap follows you, not the property. When you sell your home, the new owner starts fresh at current market value, often paying dramatically higher taxes than you did. This creates a two-tier system where long-term homeowners enjoy capped values while recent buyers pay full freight.

Refinancing does not reset your cap. You can refinance your mortgage as many times as you want without affecting your assessed value or homestead exemption. The cap only resets when ownership actually transfers to a new person or entity.

How to Protect Yourself from Excess Increases

Even with the 10% cap in place, you're not powerless against unfair appraisals. Here's your action plan:

1. File Your Homestead Exemption

The 10% cap only applies if you have a qualified homestead exemption on file with your county appraisal district. If you haven't filed yet (or bought a new home in the past year), apply immediately. The exemption is free and reduces your assessed value by $140,000 for school taxes (raised from $100,000 by SB 4, approved by voters as Prop 13 in November 2025 and retroactive to the 2025 tax year), plus additional amounts for county and city taxes. Homeowners 65 or older or disabled get an additional $60,000 school exemption on top of that.

2. Review Your Appraisal Notice Every Year

Texas appraisal districts mail notices in April showing your new market value and assessed value. Check three things:

• Is your homestead exemption showing on the notice?
• Did they increase your assessed value by more than 10%?
• Does the market value reflect your property's actual condition?

If something looks wrong, you have until May 15th (or 30 days after your notice is mailed, whichever is later) to file a protest with your Appraisal Review Board. Missing this deadline means you're stuck with that value for the entire year. Need help? Read our guide on what evidence you need for a property tax appeal.

3. Appeal When the Market Value Is Inflated

Even though you pay taxes on the capped assessed value, challenging an inflated market value still matters. Here's why: every year, your assessed value tries to "catch up" to market value at 10% per year. If the appraisal district sets your market value artificially high today, you'll be playing catch-up for years.

For example, if your true market value is $400,000 but the district claims $500,000, your assessed value will keep climbing toward that inflated target. Winning an appeal to reduce market value from $500,000 to $400,000 saves you money for years into the future as your assessed value climbs at a slower rate.

4. Watch for Tax Rate Increases

Remember: the 10% cap doesn't protect you from tax rate hikes. Your school district, city, and county each set their own tax rates, and together these rates determine your total tax bill. Combined rates vary widely by location and have compressed in many areas since the 2019 reforms; your local truth-in-taxation notices show the current figures for your address.

Rates aren't unlimited, though. Since 2020, cities and counties that raise maintenance-and-operations revenue more than 3.5% must win an automatic voter-approval election, and school district levy growth is held to roughly 2.5%. Junior colleges, hospital districts, certain water districts, and low-rate taxing units keep the older 8% threshold. Pay attention to local elections and bond proposals: school bonds, road improvements, and new municipal services often mean higher rates or new debt levies. While you can't appeal tax rates directly, you can vote on bonds and voice concerns at public hearings before rates are finalized.

Real-World Examples: How the Cap Saves Money

Example 1: A Homestead in a Hot Market

Take a homestead assessed at $400,000 whose market value jumps 25% to $500,000 in a single year. Without the cap, the tax bill would be figured on the full $500,000. At an illustrative combined rate of 2%, that's $10,000 per year.

With the 10% cap, the assessed value can only rise to $440,000. At that same 2% rate, the bill is $8,800 instead of $10,000, a savings of $1,200 in one year. If market values keep outrunning the 10% cap in following years, the gap between capped value and market value widens, and the annual savings compound as long as the owner stays in the home.

Example 2: A Rental Duplex Under the Circuit Breaker

Now consider a rental duplex assessed at $420,000 that has been owned for more than a full calendar year. Comparable sales push its market value to $550,000, a 31% jump. Rental property gets no homestead cap, so before 2024 the owner would have paid taxes on the full $550,000.

Under the 20% circuit breaker cap, the assessed value maxes out at $504,000 (a 20% increase). At an illustrative 2% combined rate, that's taxes on $46,000 less, roughly $920 saved in the first year. If the Legislature renews the program beyond 2026, these savings compound annually. Learn more about whether it's worth appealing property taxes for rental properties.

The Future of Texas Property Tax Caps

The 10% homestead cap has been Texas law since 1997 and enjoys strong political support; it's unlikely to disappear anytime soon. The 2025 legislative session delivered the biggest recent relief through exemptions rather than tighter caps: voters ratified the $140,000 school homestead exemption (Prop 13), the $60,000 additional senior and disabled exemption (Prop 11), and the $125,000 business personal property exemption (Prop 9) in November 2025, each with overwhelming approval.

The biggest open question now is the circuit breaker. The 20% cap on non-homestead property expires December 31, 2026 unless the Legislature renews it. If it lapses, rental and small commercial property returns to uncapped annual increases in 2027, which would make yearly protests even more important for those owners.

Stay informed by following your local appraisal district's announcements and paying attention to state legislative sessions. Major property tax changes typically require constitutional amendments in Texas, which means voters ultimately decide through ballot measures.

Frequently Asked Questions

How Texas Compares to Other States

Texas's 10% homestead cap offers solid protection, though not as strict as some states:

• California: 2% cap under Proposition 13 (stricter than Texas, provides stronger long-term savings)
• Florida: 3% or CPI cap on homesteads (similar to TX, slightly more flexible) plus 10% on non-homestead
• New York: 2% tax levy cap (not an assessment cap); your individual taxes can still jump dramatically
• Pennsylvania: No assessment cap; values can reset to full market whenever the county reassesses
• Illinois: No assessment cap; a levy limit constrains districts, but individual assessments can jump sharply
• Ohio: No assessment cap; triennial reappraisals can move values a long way in one step

While Texas property tax rates remain high by national standards (a trade-off for having no state income tax), the 10% homestead cap prevents the worst assessment shocks that homeowners in uncapped states experience during hot markets.

Key Takeaways

• Texas homesteads have a 10% annual cap on assessed value increases, one of the best protections in the country
• Non-homestead properties under the indexed threshold ($5.32M for 2026) get a temporary 20% circuit breaker cap through 2026; properties above it have no cap
• The school homestead exemption is now $140,000 (Prop 13, 2025), with an extra $60,000 for homeowners 65 or older or disabled (Prop 11)
• The cap doesn't protect against tax rate increases, new construction, or missing homestead exemptions, though city and county rate growth above 3.5% now triggers an automatic election
• Always file your homestead exemption and review your appraisal notice every April
• Protest inflated market values even if you're paying on a capped assessed value; it affects your future taxes
• The cap resets when you sell, so new buyers pay taxes on full market value

Texas's property tax cap system provides meaningful protection for homeowners, but it's not a complete shield against rising tax bills. Staying informed, filing exemptions on time, and protesting when values are inflated are all essential strategies for keeping your property taxes under control.

Figures and law citations in this guide are current as of July 2026. Exemption amounts, circuit-breaker thresholds, and rate-election rules can change with future legislative sessions; confirm details with your county appraisal district before acting.