Circuitbreakers: The Best Way to Control Property Taxes

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Dick Lavine /(512) 320-0222 x 101

April 3, 2009

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A circuitbreaker is a targeted property tax reduction program that operates like an electric circuitbreaker, which cuts off the electric current to a house before an electrical surge can cause damage. A property-tax circuitbreaker reduces property taxes that exceed a certain percentage of a taxpayer’s income. Circuitbreaker programs account for a taxpayer’s ability to pay when calculating a property tax bill. Without a circuitbreaker, the property taxes owed on a home can rise, even when a homeowner’s income does not—or worse, when the homeowner loses income due to unemployment. Policymakers can target circuitbreakers to taxpayers who have the most difficulty paying property taxes and reduce their tax liability to a manageable level. Because of this careful focus, circuitbreaker programs cost far less than across-the-board rate reductions or increases in exemptions. This Policy Page examines variations among several states’ thresholds for triggering the circuitbreaker and how they administer their programs.