Property tax rates vary widely from state to state. In some states, the taxes can be quite high and represent a significant share of income for individuals and families. To help mitigate the burden of property taxes, 21 states have created a “property tax circuit breaker” program. This type of property tax relief was first developed in the 1960s and called a “circuit breaker” because it protects taxpayers from a property tax “overload,” just as an electric circuit breaker stops the flow of electricity to prevent a circuit overload. These programs reduce the property tax liability for individuals and families whose property tax payments are a large percentage of family income. When property taxes exceed a certain percentage of family income, the family receives a rebate for property taxes in excess of the “overload level.”1
Each state’s program varies but most are primarily targeted at low- and moderate-income working families. Some are only available to senior citizens and individuals with disabilities, while others are available to either homeowners or renters. Renters are eligible based on their rental expenses, since landlords tend to redirect a portion of their property taxes to tenants. The income ceilings at which families can receive the credit vary as well as the maximum benefits.2 Many other states provide some sort of targeted property tax relief, though not specifically structured as a “circuit breaker.”
For more information on Property Tax Circuit Breakers see:
Property Tax Circuit Breakers, Institute on Taxation and Economic Policy, September 2011
“Property Tax Relief: The Case for Circuit Breakers,” Daphne A Kenyon, Adam H. Langley and Bethany P. Paquin, Land Lines, Lincoln Institute of Land Policy, April 2010
Property Tax Circuit Breakers: Fair and Cost-Effective Relief for Taxpayers, John Bowman, Daphne A. Kenyon, Adam Langley and Bethany Paquin, Lincoln Institute of Land Policy, May 2009
The Property Tax Circuit Breaker: An Introduction and Survey of Current Programs, Karen Lyons, Sarah Farkas and Nicholas Johnson, March 21, 2007
1 Daphne A. Kenyon, Adam H. Langley, and Bethany P. Paquin, “Property Tax Relief: The Case for Circuit Breaker” Lincoln Institute of Land Policy. Land Lines. April 2010.
2 Karen Lyons, Sarah Farkas, and Nicholas Johnson, “The Property Tax Circuit Breaker: An Introduction and Survey of Current Programs”, Center on Budget and Policy Priorities. March 21, 2007