Resources · Homeowners
How the Texas Homestead Cap Works
Reviewed by Daniel Ortiz · Senior Property Tax Consultant · Last reviewed September 2026
The homestead cap limits how fast your home’s taxable value can rise. It doesn’t limit how fast the market value rises, and that difference is why owners with a cap should still protest.
Market, Appraised, Assessed, and Taxable Value
Market value. What the home would sell for on January 1. This is the value you protest.
Appraised value. Usually the same as market value. For a homestead under the cap, it can be lower.
Assessed value. An older term. People often use it to mean the appraised value.
Taxable value. The appraised value minus your exemptions. Each taxing unit has its own.
How the 10% Homestead Cap Works
A homestead’s appraised value can’t rise more than 10% a year, plus the value of any new improvements. The cap starts on January 1 of the year after you first qualify for the homestead exemption.
Example: last year’s appraised value was $300,000. This year the market value is $360,000. The capped appraised value is $330,000 ($300,000 × 1.10), and that’s the value taxes are calculated on.
What “HS Cap Loss” Means on Your Notice
Your appraisal notice may show a line called homestead cap loss, HS cap loss, or homestead cap adjustment. It’s the difference between your market value and your capped appraised value: the amount of value the cap is keeping off your bill this year. In the example, the cap loss is $30,000.
Why is my homestead cap zero? Because your market value is at or below the capped value. That happens when the market is flat or falling, in your first year with the exemption, or the year after a protest brought the market value down.
Why You Should Still Protest With a Homestead Cap
The cap only slows the appraised value on its way to market value. As long as market value sits above the capped value, the appraised value keeps rising 10% a year, even in years the market barely moves.
| Tax year | Market value | HS cap | Appraised value |
|---|---|---|---|
| 2021 | $890,000 | $0 | $890,000 |
| 2022 | $1,275,000 | $296,000 | $979,000 |
| 2023 | $1,329,000 | $252,100 | $1,076,900 |
| 2024 | $1,369,510 | $184,920 | $1,184,590 |
On this homestead, market value jumped 43% in 2022. The cap held the appraised value to a 10% increase. But in 2023 the market rose only 4%, and the appraised value still rose the full 10%. The same thing happened in 2024, with the market up 3%. The unprotested 2022 market value kept feeding 10% increases for years.
Protesting the 2022 market value would have saved nothing that year, since the cap was already doing the work. It would have saved money in 2023, 2024, and every year after.
When the Cap Ends
The cap belongs to the owner, not the house. It ends on January 1 of the year after you sell, move out, or stop qualifying. A buyer starts over: no cap in their first year with the exemption, then 10% after that.
The cap applies only to homesteads. Other real property valued at $5,320,000 or less had a separate 20% limit in 2026, called the circuit breaker. It expires December 31, 2026, unless the Legislature extends it.
This article is general information about Texas property tax, not legal advice. Rules and deadlines can change with each legislative session.
Homestead Cap FAQs
Does the cap apply to market value?
No. Only to appraised value. Market value can rise or fall any amount.
Do improvements count toward the 10%?
No. New improvements are added on top of the capped value at full value.
Does the cap transfer when I buy a new home?
No. It starts over at the new home.
The Cap Slows the Increase. A Protest Lowers the Starting Point.
We protest your market value every year, cap or no cap. No savings, no fee.