Protecting families from the ‘property tax overload’

Property taxes are calculated based on your home’s assessed value, not on what you have in your bank account. In a region where rapid appreciation even for the modest homes due to rising demand is a norm, a home’s value can skyrocket while the owner’s income remains stagnant. When your tax bill grows faster than your paycheck, you face a “tax overload.” Without intervention, this mismatch creates serious affordability issues that contribute to displacement and erode the neighborhood stability we all value.

It is about time we discuss a proven solution used across a number of states: the Property Tax Circuit Breaker. The concept is as simple as the safety device in your electrical panel. When the “load” on a household’s budget becomes too heavy, the circuit breaker trips and provides relief by refunding or crediting back the portion of property tax that exceeds a set percentage of income. Unlike across-the-board rate cuts that mostly benefit higher-value owners, a circuit breaker is a targeted credit that links tax liability directly to the ability to pay.

To see the impact, we can look at models already functioning in states like Massachusetts and Maryland. Imagine a senior homeowner in San Mateo, is living on a fixed income of $60,000 in a modest two-bedroom and one-bath home of $1 million assessed value. If their property tax bill at the current effective rate of 1.4% is $14,000, their tax burden is a staggering 23.3% of their total income. Under a 10% circuit breaker threshold, any amount over $6,000 would be credited back. This neighbor would receive an $8,000 credit, bringing his effective tax burden back to a manageable level.

This protection extends to renters as well. Let’s say a family of four with an income of $100,000 per year is paying $60,000 in annual rent for a three-bedroom, one-bath home of assessed value $1.1 million. Total tax paid by landlord on this home at current effective property tax rate of 1.4% would be $15,400. Renters are also paying “imputed” property tax through their landlord. If 25.6% of that rent ($15,400) is treated as tax, it exceeds a 10% income threshold by $5,400. A circuit breaker refund of $5,400 allows that renter to stay in their neighborhood rather than being priced out by costs they cannot control.

Critics often worry that tax relief drains local coffers, hurting our schools and parks. However, many circuit breaker programs are structured as state income tax credits, therefore not touching local tax revenue. If Maine, Michigan, Minnesota, Vermont and the District of Columbia can do this, why California, the richest donor state in the nation, can’t?

Ultimately, this is an issue of equity and community health. Older homeowners are more likely to live on fixed incomes, have owned their homes for long and be deeply attached to their neighborhoods. Evaluations of these programs show they reduce foreclosure risk and lower tax delinquency. By tying property tax to income rather than to volatile real estate cycles, we give households across all income levels a predictable path to remain in their homes. We want a San Mateo where the people who built our community aren’t forced to leave it simply because their home became “too valuable” to live in.

Mantosh Kumar, a husband, a father, a Democrat, and a longtime resident of San Mateo, is a candidate for the U.S. House of Representatives, District 15.