What Is the Homestead Cap?

The Homestead Cap is a rule in Texas law that limits how much the taxable value of your primary home can increase each year — as long as you have a homestead exemption on the property. The purpose of the cap is to protect homeowners from dramatic spikes in property taxes when property values rise quickly. 

In simple terms: if your home’s market value increases a lot from one year to the next, the Homestead Cap prevents the taxable value used for property taxes from going up more than a set limit.

Who Does the Cap Apply To?

• Only applies to your primary residence (your homestead). 
• You must have a Homestead Exemption filed and qualified. 

When Does the Cap Start?

• The cap does not begin immediately when you first move in or first file for homestead exemption. 
• It starts January 1 of the tax year after the first year you qualify for the homestead exemption. 
  • Example: If you qualified for the exemption in 2025, the cap starts for tax year 2026. 

What is the 10% Limit? 

The law states that once your cap begins, the appraised value used for taxes (your assessed value) cannot increase by more than 10% over the prior year’s appraised value, plus the value of any new things you added (like home improvements).

In other words: If your home’s value increased a large amount because the market changed, you still won’t be taxed on more than a 10% increase of value (plus new improvements). However, if the market value only increased a small amount, or went down, then your appraised value can often be the market value. 

Example:

• 2024 appraised value: $300,000 
• 2025 market value: $390,000 (30% increase)
• Under the Homestead Cap, your 2025 taxable value will be $300,000 + 10% = $330,000 (before accounting for new improvements)
• You are not taxed on the full $390,000 because the cap limits the increase you pay taxes on

What Happens With Improvements to Your Property?

If you add something new to your home, such as a deck or additional room, the added value is not limited by the 10% rule. Instead, it is added on top of the capped value.

If you improved your home during the year, your taxable value can be higher than just the 10% increase alone.

What The Cap Is and Is Not?

It is:

• A limit on appraised value increases used to calculate your tax bill. 
• A way for homeowners to avoid big tax spikes when market values jump. 
• Automatically applied if you qualify for the homestead exemption and the cap applies. 

It is not: 

• A cap on the actual market value of your home (that can still rise freely). 
• A guaranteed tax cut — because tax rates and other exemptions still affect your final tax bill. 
• A cap on the tax bill amount itself — it caps the value used to calculate taxes, not the tax rate. 

When Does the Cap End?

The cap ends if: 

• You no longer qualify for a homestead exemption (for example, you move out). 
• Neither you nor your spouse qualifies for the exemption anymore. 

Key Takeaways

• The Homestead Cap limits how much your home’s taxable value can go up each year to protect you from big property tax increases. 
• It limits increases to 10% per year, plus any new improvements. 
• It only applies to your primary home with a homestead exemption and starts the year after you first qualify. 
• It’s a protection for homeowners — not a tax obligation itself. 

We’re here to help, so don’t hesitate to reach out if you have any questions!

Contact Information: 
Bexar Central Appraisal District 
411 N Frio St 
PO Box 830248 
San Antonio, TX 78283-0248 
Phone: 210-242-2432 
Fax: 210-242-2454 or 210-242-2453