What is a Circuit Breaker?  

• A circuit breaker is a tax rebate or credit that limits a taxpayer’s total property taxes to a percentage of their household income, protecting homeowners from a property tax bill that is too high relative to their household income. 

How Does it Work?

• Just as a circuit breaker in a home protects the electrical system from an overload, a property tax circuit breaker would protect homeowners from a property tax bill that is too high relative to their household income.

• The state sets a maximum percentage of income that a household is expected to pay in property taxes. When a property tax bill exceeds that percentage the state – through a circuit breaker-reduces property taxes (with a tax credit or rebate) in excess of this “overload” level.

Why a Circuit Breaker?

Tax fairness for all taxpayers! A circuit breaker would:

• Provide immediate relief to seniors and low and middle-class homeowners struggling with high property taxes - those who need it the most.

• Make the overall tax system more progressive. Currently, lower income household's pay a far higher share of their income to property taxes than higher income household. 

• When a circuit breaker is combined with full implementation of the state's commitment to increased school aid, tax relief is provided without harming the quality of education or jeopardizing funding for crucial public services.

• Insure New Yorkers against unreasonable tax levels in the future. It is a more equitable system of taxation, not just controlled spending or a one time benefit.

Public Support

• There is considerable public support for a circuit breaker. A July 2008 poll conducted by the Siena Research Institute found that 75 percent of voters back a circuit breaker that would limit property taxes to a percentage of homeowners' incomes and fund that break through a tax on millionaires. Given the choice of just one they favor the circuit breaker 52-36 over the tax cap.

• A poll conducted by a tax policy group TREND NY showed that voters overwhelmingly support legislation that would limit a taxpayer’s total property taxes rather than a cap on local school taxes. By more than a two-to-one margin, respondents preferred an income-based cap on their taxes over a cap on local school levies. When given the specific choice of a 4 percent school tax cap or a limit of 5 percent of their income for their total property tax bill, voters favored the circuit breaker five to one.

Why Not a Traditional Tax Cap?

• It is “regressive” because it is based on property value regardless of your income (ability to pay).

• It will at best limit future tax increases,   taxes will still rise.   

• There is already a “contingency budget” mechanism in place.  When a school district’s budget is defeated the district must adopt a contingency budget that is capped at 120 percent of CPI or 4 percent, whichever is lower.
  

Doesn’t New York Already Have a Circuit Breaker?

• Yes, but it has the lowest maximum income for eligibility compared to other states - homeowner household incomes must be less than $18,000. The maximum benefit is $375 for seniors and $75 for those residents under age 65.
• STAR - The STAR tax relief program enacted last year, rebates taxpayers based on household income but does not consider the size of a household’s property tax bills relative to income.

Is There a Legislative Proposal to Expand New York's Circuit Breaker?

• Yes, among the proposals is legislation that would cap the maximum real property tax paid by New Yorkers who have a household income of $250,000 or less. Homeowners would receive an income tax credit equal to 70 percent of the taxes paid over an allowed percentage cap. The property tax percentage cap would adjust from 6 to 8 percent, according to income.