A rising market estimate can surprise a homeowner whose residence qualifies for a homestead exemption. The Texas property tax code provides a specific limit on increases in a qualifying home’s appraised value, but the limit has conditions. We explain when Section 23.23 applies, how to check the calculation on an appraisal notice, and why a 10 percent limit on one figure cannot guarantee the same limit on a tax bill.
Under Texas Tax Code Section 23.23, the limitation generally takes effect on January 1 of the tax year after the first year in which the owner qualifies the residence for an exemption under Section 11.13. It does not begin automatically on the day someone closes on a house. A homeowner who qualifies for an exemption during a year may therefore see a different appraisal treatment in that first year than in the next.
The property's exemption status is the starting point, not its purchase price. A new owner should confirm which tax year the exemption covers before trying to apply a 10 percent ceiling. An existing owner's capped figure does not necessarily carry over to a new owner.
Market value reflects an appraisal estimate. Appraised value reflects any applicable limitation, including the homestead cap. Taxable value reflects exemptions for a taxing unit. We encourage homeowners to compare these labels separately rather than reading the largest or smallest number as the entire tax calculation.
A home can have a market value well above its capped appraised value. The district still determines and records market value, even when the cap keeps the value used for appraisal purposes lower. The Comptroller's explanation of how appraised value is determined helps distinguish valuation from the later steps that produce a bill.
Here is a simple way to read the figures before deciding whether a notice needs a closer look:
| Notice figure | What it means | What to compare |
|---|---|---|
| Market value | Estimated value under appraisal rules | Current property characteristics and valuation evidence |
| Appraised value | Value after any applicable limitation | Prior-year appraised value and qualifying improvements |
| Taxable value | Value used for a specific taxing unit after exemptions | Applicable exemptions and that unit's tax rate |
Assume a residence already qualifies for the cap. Its previous-year appraised value is $300,000, the current market value is $500,000, and the market value of qualifying new improvements is $20,000. Start with 10 percent of the preceding appraised value: $30,000. Add that amount to $300,000, then add $20,000 for the new improvements. The resulting ceiling is $350,000.
Section 23.23 uses the lesser of that ceiling and the applicable market value. Here, the lesser figure is $350,000, so the increase in the capped appraised value is $50,000. Without the qualifying new improvements in this illustration, the calculation would instead produce $330,000. The additional $20,000 does not come from a different percentage; it is a separate statutory component.
A newly added structure or another qualifying change may increase the amount allowed above the ordinary 10 percent calculation. Section 23.23(e) defines a new improvement by when it was made, its effect on market value, and whether that value appeared in the preceding appraisal. Ordinary maintenance and repairs to an existing structure or grounds do not meet that definition merely because they cost money.
Changes in ownership can affect eligibility and the year in which the limitation operates. The statute addresses continuing qualification by an owner, spouse, or surviving spouse. If the deed, occupancy, or exemption status changes, verify the applicable rule before carrying a previous cap into a fresh calculation.
First, identify the year the residence qualified for the homestead exemption. Then compare the previous year's appraised value with the current market and appraised figures. Look for a separate amount assigned to new improvements and ask which work it reflects. If the calculation still seems inconsistent, use the appraisal district's normal valuation and review channels within the applicable notice deadlines.
We keep our property-tax information available as a starting point for related notices and background. Keep copies of the current and preceding notices when asking about a particular property.
Yes. The law limits increases in qualifying appraised value, not the market estimate itself. Appraisal records may show a higher market figure and a lower capped figure in the same tax year. The amount of the difference depends on the property.
Qualifying new improvements can increase the ceiling in addition to the standard 10 percent component. Repairs and ordinary maintenance are treated differently. Check what the appraisal record calls an improvement before assuming that any recent work should change the cap.
No. Taxes depend on taxable values, exemption rules, and the rates adopted by the taxing units. A change in any of those factors can affect the final bill. Section 23.23 governs an appraisal figure, not the annual amount due.
This explanation covers general Texas appraisal rules. Each property's exemption history and valuation facts may change the result. Review your notice and confirm individual questions with the appropriate appraisal district.