The 10% homestead cap is a Texas law that limits how much your homestead property's assessed value can increase in a single year. Once you have a homestead exemption in place, your taxable value cannot rise more than 10% from one year to the next—regardless of how much market values increase.
This protection is automatic with your homestead exemption. If your county appraises your home at $500,000 this year but it was $400,000 last year, your capped value would be $440,000 (10% increase), not the full market value.
The cap creates a 'ceiling' that follows you as long as you maintain your homestead. Your market value and capped value are both shown on your appraisal notice.
The 10% cap is one of the most powerful property tax protections in Texas—but most homeowners don't fully understand how it works.
Key facts about the cap:
• Applies ONLY to homestead properties (not rentals/commercial)
• Automatic once you file homestead exemption
• Resets when you move (new home starts over)
• Can take years to 'catch up' to market value
• Protesting market value STILL matters for future years
Why protest even when capped:
Even if your capped value is well below market value today, reducing market value lowers where your cap can grow to. In 5-10 years, the cap catches up—lowering market value now means lower taxes later.
Understanding the cap in action:
2023 values:
• Market value: $400,000
• Capped value: $400,000 (no cap applied yet)
2024 hot market:
• New market value: $520,000 (+30%)
• Capped value: $440,000 (only +10% allowed)
• Tax savings from cap: You're taxed on $440,000 instead of $520,000
2025 continued growth:
• New market value: $550,000
• Capped value: $484,000 (10% of prior capped value)
The cap compounds annually, keeping your assessed value 10%+ below market in rising markets.
No. The cap only applies to residential homesteads—your primary residence where you've filed a homestead exemption. It doesn't protect rental properties, second homes, vacant land, or commercial properties.
The cap doesn't transfer. Your new home starts with its purchase price as the base value, and the cap applies to future increases. This is why longtime homeowners often face 'tax shock' when they move—they lose decades of cap protection.
Yes. If your market value drops below your capped value, your taxable value becomes the lower market value. The cap limits increases, not decreases. You always pay tax on the lower of market value or capped value.