A property tax cap limits how much your assessed value or tax bill can increase in a single year.
Two types:
The goal: prevent homeowners from being priced out by sudden spikes in property taxes.
Texas caps the annual increase in your assessed value at 10% β but only if you have a homestead exemption.
How it works:
The catch: The cap applies to assessed value, not your tax bill. If tax rates increase, your bill can still go up more than 10%.
California caps annual assessment increases at 2% β for everyone, not just homesteaded properties.
How it works:
The catch: When you sell, the new owner's assessed value resets to the purchase price. That's when property taxes jump.
Yes. Even with a cap, you should protest or appeal if:
A successful protest reduces your base value β and the cap applies to a lower number going forward.
Property tax caps protect homeowners from runaway increases. But they don't prevent all increases β and they don't fix errors.
Texas: 10% annual cap on assessed value (homestead only)
California: 2% annual cap on assessed value (all properties)
Even with a cap, challenging an over-assessed value saves you money now and in the future.
Texas Example: Your home is valued at $300,000 this year. Next year, the market value is $350,000.
Without the cap, your assessed value would jump to $350,000 (+17%).
With the cap, it can only increase to $330,000 (+10%).
The cap applies to assessed value, not your total tax bill. If tax rates increase, your bill can still go up even with a cap on assessed value.
In California, the cap resets and the new owner pays taxes based on the purchase price. In Texas, the new owner's homestead cap starts from their purchase price.
In Texas, no β the 10% cap only applies to homesteaded properties. In California, yes β the 2% cap applies to all properties including rentals.