Property Tax Circuit Breaker Programs

18 States Offer This Type of Relief

Home with a "for sale" sign out front
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Low-income homeowners pay a larger percentage of their incomes in property taxes than high-income taxpayers do, because these taxes are based on the value of a home, not on income. They're disconnected from an owner's ability to pay. One type of targeted tax break for this problem is referred to as a "circuit breaker" program.

Property Taxes vs. Income Taxes

A taxpayer who loses their job will find that their income taxes go down, because they're earning less. But their property taxes will remain the same, even though their ability to pay those taxes has decreased. Residential taxes are said to be "regressive" for this reason.

The Institute on Taxation and Economic Policy (ITEP) assessed the fairness of state and local property tax systems and found that they're fundamentally inequitable, taking a much greater percentage of income from low- and middle-income families. ITEP found that the less someone earns in annual income, the more they're likely to pay in effective state and local tax rates.

Homestead Exemptions

Elected officials in each state have two broad-based options when they attempt to enact property tax relief for low- and middle-income families: property tax circuit breakers and homestead exemptions.

A homestead exemption is an example of a broad, across-the-board tax cut for taxpayers of all income levels. It usually exempts a flat dollar amount or flat percentage of home value from the tax.

Property Tax Circuit Breakers

A tax circuit breaker can be broadly defined as any property tax relief that limits or reduces taxes for certain individuals. Circuit breaker programs are often specifically enacted for owners with who have disabilities or low income, or those who are older.

The term derives its name from an electrical circuit breaker that shuts off the current when a system is overloaded. Similarly, circuit breaker programs kick in when too much of a taxpayer's income must go to property taxes. The circuit breaker reduces or eliminates the overload.

Types of Circuit Breaker Programs

States use a variety of circuit breaker methodology. The most common are threshold circuit breakers, which are based on a percentage of income that property taxes must exceed. Within that broad category, there are single-threshold circuit breakers (which apply the same percentage of circuit breaker to all people equally) and multiple-threshold circuit breakers (which apply different percentages to different income levels).

States With Circuit Breaker Tax Relief

Eighteen states and the District of Columbia have adopted this form of tax relief, but a good portion of them offer assistance only to people who are older and/or people with disabilities. This is based on the theory that these individuals tend to earn less.

Circuit breaker income eligibility limits range from a high of $147,000 in Vermont to a negligible $5,500 in Arizona.

An additional 13 states offer other forms of property tax relief based on income, age, and disability. The following homeowners qualify in each state offering for at least one of these types of tax relief:

  • Arizona: An income-based program for homeowners age 65 and older and those receiving Supplemental Security Income (SSI); no circuit breaker tax relief.
  • Colorado: An income-based program for homeowners age 65 and older, surviving spouses age 58 and older, and people with disabilities; no circuit breaker tax relief.
  • Connecticut: An income-based program for homeowners age 65 and older, surviving spouses age 58 and older, and people with disabilities; no circuit breaker tax relief.
  • District of Columbia: Circuit breaker tax relief with no age requirements; offers a separate program for people who are older or with disabilities.
  • Hawaii: An income-based program with no age requirements; no circuit breaker tax relief.
  • Iowa: An income-based program for homeowners age 65 and older and those with disabilities; no circuit breaker tax relief.
  • Idaho: An income-based program for homeowners age 65 and older, surviving spouses, people with disabilities, former prisoners of war, veterans with disabilities, and orphaned minors; no circuit breaker tax relief.
  • Kansas: An income-based program for homeowners age 55 and older, those with disabilities, and guardians of dependent children under age 18; no circuit breaker tax relief.
  • Massachusetts: Circuit breaker tax relief for homeowners age 65 and older.
  • Maine: Circuit breaker tax relief with no age requirements; offers a separate program for people who are older.
  • Maryland: Circuit breaker tax relief with no age requirements.
  • Michigan: Circuit breaker tax relief with no age requirements; offers a separate program for those who are older.
  • Minnesota: Circuit breaker tax relief with no age requirements.
  • Montana: Circuit breaker tax relief with no age requirements.
  • Missouri: Circuit breaker tax relief for homeowners age 65 and older and people with disabilities.
  • New Hampshire: An income-based program for all ages; no circuit breaker tax relief.
  • New Mexico: Circuit breaker tax relief for homeowners age 65 and older.
  • New York: An income-based program for all ages; no circuit breaker tax relief.
  • North Dakota: Circuit breaker tax relief for renters age 65 and older and people with disabilities.
  • Oklahoma: Circuit breaker tax relief for homeowners age 65 and older and people with disabilities.
  • Oregon: Circuit breaker tax relief for homeowners age 58 and older.
  • Pennsylvania: An income-based program for homeowners age 65 and older, surviving spouses age 50 and older, and people with disabilities; no circuit breaker tax relief.
  • Rhode Island: Circuit breaker tax relief for homeowners age 65 and older and those with disabilities.
  • South Dakota: An income-based program for homeowners age 65 and older and those with disabilities; no circuit breaker tax relief.
  • Utah: Circuit breaker tax relief for homeowners age 65 and older.
  • Vermont: Circuit breaker tax relief with no age requirements.
  • Wisconsin: Circuit breaker tax relief with no age requirements.
  • West Virginia: Circuit breaker tax relief with no age requirements.
  • Wyoming: An income-based program with no age restrictions; offers a separate program for older people but no circuit breaker tax relief.

The exact systems in place vary from state to state.

The Advantages of Circuit Breakers

Circuit breaker programs are designed to reduce the tax burden of only low- and middle-income families, so they're much less expensive for the state than across-the-board tax cuts.

Additionally, they introduce the "ability to pay" criteria, because they respond to income level. They reduce property taxes for these groups to a manageable level and prevent an inability to pay from forcing these people out of their homes.

The Disadvantages of Circuit Breakers

The biggest disadvantage of these programs is that you have to know about them to get the tax relief they offer. A circuit breaker is generally only granted to taxpayers who apply, unlike homestead exemptions, which are often automatic, across-the-board tax cuts. The Center on Budget and Policy Priorities (CBPP) found that some programs can expect as much as two-thirds of those who qualify not to participate, because they are unaware of their eligibility or how to take advantage.

Contact your local taxing authority if you're struggling to keep up with your property tax burden on your income. This is your best—and often your only—option to find out what's available in your location.

Some states get rather creative with their property tax breaks, so you might find that other help is available even if yours doesn't offer a circuit breaker program—but you have to ask.