Texas 3% Homestead Appraisal Cap Bill 2027: What HB 563 Would Change
HB 563 proposes a 3% homestead appraisal cap. Compare it with the current 10% cap and see why appraised value and tax bills differ.
Key Takeaways:
- HB 563 and SB 298 propose a 3% homestead appraisal cap; the current general cap remains 10%.
- The introduced bills condition a January 1, 2028 start on voter approval of a constitutional amendment.
- New improvements remain a separate addition to the cap formula.
- A cap limits appraised-value growth; it does not guarantee a matching tax-bill limit.
Reviewed and updated November 12, 2026.
In this guide
- What would HB 563 change?
- When would a 3% appraisal cap take effect in Texas?
- How does the current 10% homestead cap work?
- What would 3% vs. 10% look like on a home?
- Does the bill cover rentals or commercial property?
- What should homeowners do now?
Last updated: Nov. 10, 2026
A bill filed for the 2027 Texas legislative session would lower the homestead appraisal cap from 10% to 3% a year. House Bill 563 was filed Nov. 9, 2026, with an identical Senate bill, SB 298. It would only take effect Jan. 1, 2028, and only if Texas voters approve a constitutional amendment. Nothing changes for your 2026 or 2027 values yet.
What would HB 563 change?
HB 563, by Rep. Patterson, amends Texas Tax Code Section 23.23(a), the rule that limits how much an appraisal district can raise a homestead's appraised value from one year to the next. According to the introduced bill text, the yearly increase would be limited to 3% of the prior year's appraised value instead of 10%, plus the market value of any new improvements.
Texas Legislature Online lists SB 298 by Sen. Flores as an identical companion bill in the Senate.
When would a 3% appraisal cap take effect in Texas?
The bill says it takes effect Jan. 1, 2028, but only if voters approve a constitutional amendment proposed by the 90th Legislature that lets lawmakers set a lower homestead limit. If that amendment fails at the ballot, HB 563 has no effect.
The 90th Legislature convenes Jan. 12, 2027, according to the Texas Legislative Council. To become law, the bill would need to be enacted, and the amendment would need two-thirds of each chamber before going to voters.
How does the current 10% homestead cap work?
Today, Section 23.23 limits a homestead's appraised value to the lesser of its market value or last year's appraised value plus 10%, plus new improvements. The cap begins Jan. 1 of the tax year after you first qualify for the homestead exemption. Our guide on the 10% homestead cap walks through how it shows up on your notice.
What would 3% vs. 10% look like on a home?
| Input or result | Current 10% rule | Proposed 3% rule |
|---|---|---|
| Prior-year appraised value | $400,000 | $400,000 |
| Current market value | $460,000 | $460,000 |
| Cap calculation, no new improvements | $400,000 × 1.10 | $400,000 × 1.03 |
| Lesser of market and capped value | $440,000 | $412,000 |
If market value instead falls to $390,000, both formulas produce $390,000 in this simplified example. A cap is a ceiling on growth, not a required increase. Qualifying new improvements are added separately to the formula.
Does the bill cover rentals or commercial property?
No. HB 563 only changes the residence homestead cap in Section 23.23. Non-homestead property under $5 million has a separate 20% "circuit breaker" limit, which is set to expire after 2026. See what the circuit breaker expiration means for rental owners.
Check these lines on your appraisal notice
- Market value: the district’s estimate before the cap.
- Appraised value: the value after any applicable appraisal limitation.
- New improvements: amounts added separately to the cap calculation.
- Exemptions and taxable value: these can differ across taxing units.
- Protest deadline and filing instructions: a pending bill does not extend them.
What should homeowners do now?
Nothing about this bill changes your 2026 bill or your 2027 notice. Your right to protest your appraised value to the Appraisal Review Board (ARB) stays the same. A successful protest can lower market or appraised value, but the effect on today’s taxable value and next year’s cap depends on which value changes. A market-value reduction that remains above a capped appraised value may produce no immediate tax saving. The 2027 protest deadline is generally Monday, May 17, 2027, because May 15 is a Saturday, or 30 days after your notice is delivered, whichever is later.
You can file on your own, or protest with TaxDrop. Here's how a Texas property tax consultant works.
Sources and verification
- HB 563 introduced text
- SB 298 introduced text
- Comptroller: appraisal and tax limitations
- Texas Tax Code §23.23
- Legislative calendar
Related guides
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FAQs
What is the Texas 3% appraisal cap bill?
House Bill 563, filed Nov. 9, 2026 by Rep. Patterson for the 2027 legislative session, would lower the cap on how much a homestead's appraised value can rise each year from 10% to 3%. Senate Bill 298 by Sen. Flores is an identical companion.
Is the 3% homestead cap law in Texas?
No. HB 563 is a filed bill. It would have to be enacted, and voters would also have to approve a constitutional amendment allowing a lower cap. If voters don't approve it, the bill has no effect.
When would a 3% homestead cap take effect?
HB 563 says it would take effect Jan. 1, 2028, and only if voters approve the related constitutional amendment proposed by the 90th Legislature.
What is the current homestead cap in Texas?
Under Texas Tax Code Section 23.23, the appraised value of a residence homestead generally can't rise more than 10% a year, plus the value of new improvements. The cap starts the year after you first qualify for the homestead exemption.
Does a homestead cap limit my tax bill?
Not directly. The cap limits appraised-value growth; exemptions then affect taxable value. Your bill also depends on the tax rates your school district, county, city and other local units adopt each year.
Should I still protest my value if there's a homestead cap?
A well-supported protest can still matter. Its effect depends on whether market value, capped appraised value or both change. Your market value also still matters for the cap and for future years. The 2027 protest deadline is generally Monday, May 17, 2027, or 30 days after your notice is delivered, whichever is later.
Ryder Meehan
Ryder Meehan is the Co-Founder of TaxDrop and a Licensed Property Tax Protest Consultant
