Texas 2027 is set up for a property tax surprise. Here is how to be ready.

The cap that is about to disappear

In 2023, Texas created a temporary limit called the circuit breaker. For real property that isn’t a homestead and is worth $5 million or less, the appraisal district can’t raise the taxable value more than 20% a year. It applies automatically once you’ve owned the property for a full calendar year. Think small retail, restaurants, office condos, rentals and a lot of franchise real estate.

The catch: the cap was written for the 2024 through 2026 tax years only. Unless lawmakers act, it is simply gone for 2027. The cap never changed what the property was worth. It only changed how fast the district could tax that value. So in places where the market ran ahead, there is a gap waiting.

Illustrative. The real swing depends on how far the district’s value ran ahead of the cap on your property, and whether that value was right in the first place.

Here’s the part people miss. The 2027 notice will reflect the district’s market value, and that number is produced by a mass appraisal model, not a visit to your building. If the model has your property worth more than it really is, the cap was quietly hiding that mistake. Next year, it won’t.

Why we’re telling clients to protest every location

When a cap disappears, the cheapest moment to fix a value is the first year it shows up. Once a high value is on the roll and unchallenged, it becomes next year’s starting point. Our plan for 2027 is simple:

• Run every Texas location through our valuation model now, before notices go out in the spring.
• Pull rent rolls, operating statements and recent sales while there’s time, not the week before the deadline.
• File a protest on every location where the evidence supports a lower value, by May 15 or within 30 days of the notice.
• Pair it with the business personal property rendition due April 15, so the equipment value is right too.

The rest of the Texas reform picture

In November 2025, Texas voters approved all 17 constitutional amendments on the ballot, including three big property tax changes:

• Homestead exemption: the school tax exemption for homes went from $100,000 to $140,000.
• Seniors and homeowners with disabilities: an additional $60,000 on top of that.
• Business personal property: the exemption went from $2,500 to $125,000 per location. We explain it in our guide to the $125,000 exemption.

Homeowners got the biggest relief. Businesses got real help on equipment, but commercial real estate still carries the full appraised value, and starting in 2027 it may carry it without the cap.

Data centers: the new heavyweight on the tax roll

Texas now ranks second in the country for data center capacity. That changes the math for counties, school districts and everyone else on the roll.

Data centers are taxed in two ways. The land and buildings are real property. The servers, cooling and power equipment are business personal property, and in Texas that equipment is taxed every year. Servers are replaced on short cycles and lose value fast, so how that equipment is classified and depreciated is a big deal for owners.

The incentives are big too. Texas has given data centers a sales tax exemption on equipment since 2013, and counties often add property tax abatements to win projects. In July 2026, state senators said the exemptions now run “in the billions of dollars,” and the Comptroller’s office said early estimates of growth were too low. Leaders have said they plan to file legislation when the session opens in January 2027.

Homeowners vs. incentives: who carries the load?

There are two sides to this, and both are real.

When data centers pay full freight, they can carry a lot of the local budget. Loudoun County, Virginia, home to one of the largest data center clusters in the world, taxes data center equipment at $4.15 per $100 of value, and data center revenue has helped the county cut its real property rate from $1.145 in 2016 to $0.805 for 2026.

When projects get abatements and exemptions, the opposite can happen. As one Texas senator put it, exemptions shift the tax burden onto everyone else. Either way, the lesson for owners is the same: the more a community’s budget depends on a few big taxpayers, the more it matters that your own value is right.

If you own or operate a data center

• Check that retired and replaced servers are actually off the personal property rendition. These ghost assets add up fast at data center scale.
• Make sure equipment is in the right depreciation class for its real useful life.
• Keep abatement agreements in compliance, because a missed requirement can claw back the benefit.

Our Property Tax Incentive & Abatement Analysis screens a project against available programs and the obligations that keep them in place.

Get in touch for 2027

If you own commercial property in Texas, the time to get ready is now, before the notices go out. Send us your locations and we’ll show you which ones are likely to jump and which ones are worth protesting. Levy, our agentic AI, does the first pass on every parcel, and Reserve Tax Group files the protests. Email info@reservetax.ai to get on the 2027 list.

Sources

• Bastrop Central Appraisal District, circuit breaker limitation
• Texas Legislature, HB 84 (89th Legislature, 2nd called session), introduced text
• Property Tax Due Dates, Texas 20% appraisal cap expires at the end of 2026 (Oct 2026)
• Legal 500, Texas voters approve all 17 constitutional amendments (Nov 2025)
• KXXV, Texas leaders question data center tax breaks (July 2026)
• Loudoun County, Data centers: tax revenues and county budget

This article is general information, not tax or legal advice. Rules and deadlines change and vary by county. Check with the appraisal district or assessor, or ask us, before you file.