2026 Property Tax Reform in Review: Unfinished Business: Why Levy Caps Are Needed to Fully Protect All Taxpayers
Property taxes are one of the most visible and often frustrating ways local governments raise revenue. As home values rise, policymakers frequently look for ways to protect taxpayers from sudden or unsustainable increases.
My employer, Americans for Prosperity, supports reforms like levy caps and enhanced taxpayer notification of proposed property tax revenue increases, called Truth in Taxation. In March, the House passed HB 1116, which included these provisions. Unfortunately on Sine Die, the Senate voted down HB 1116, and the final vehicle for reform, SB 33, didn’t include a levy cap or Truth in Taxation. Instead, SB 33 continues in the direction of assessment caps that track with inflation. Governor Kemp has now signed SB 33 into law.
While both assessment and levy caps sound similar, their real-world impacts are very different. Experience across the country shows that levy caps are far more effective, fairer, and more transparent than assessment caps when it comes to protecting property taxpayers.
Assessment Caps Limit Value Growth, Not Taxes
Assessment caps restrict how fast a property’s assessed value can increase from year to year, regardless of how rapidly market values rise. At first glance, this approach seems appealing—if your home’s value doubles, your tax bill shouldn’t.
But assessment caps don’t actually limit how much revenue local governments collect. Instead, they change who pays.
When some properties are shielded by capped assessments, local governments still calculate tax rates to meet their budget needs. The result is a shift in the tax burden onto properties that aren’t capped—often newer homeowners, renters (with the cost of increased assessments passed on through higher rents), and businesses.
California’s Proposition 13 is the most widely cited example. Passed in 1978, Prop 13 limits assessed value growth to 2 percent until a property is sold. Over time, this has produced stark inequities: two identical houses can have wildly different tax bills depending solely on when they were purchased. New buyers—often younger families—pay far more than their neighbors for the same public services.
Florida’s “Save Our Homes” amendment shows similar effects. Longtime homeowners benefit from limited assessment growth, while newer residents shoulder higher effective tax rates. Assessment caps protect some taxpayers, but only by quietly over‑taxing others.
Levy Caps Protect Everyone Equally
Levy caps take a fundamentally different approach. Rather than limiting property values, they limit how much total property tax revenue a government can raise from one year to the next, often tied to inflation or population growth unless voters approve more.
This means that even when property values rise sharply, governments don’t automatically receive a windfall. Any increase in taxes must result from an explicit policy decision.
Massachusetts’ Proposition 2½ is a strong example. Adopted in 1980, it limits annual property tax levy growth to 2.5 percent unless voters approve an override. The protection applies universally—every taxpayer benefits, not just those who bought their homes decades ago. When local officials want more revenue, they must make their case directly to voters.
Utah Shows How Levy Caps Can Work Best
Utah offers one of the strongest real‑world demonstrations of why levy‑based systems outperform assessment caps. Instead of capping assessments, Utah uses a “Truth in Taxation” system that effectively functions as a levy cap.
When reassessments or market growth increase property values, tax rates are automatically adjusted downward so that local governments collect roughly the same total property tax revenue as the prior year. If a local government wants to raise more, it must send notices directly to property owners, not just a notice in a seldom read newspaper, and approve a tax increase through a transparent process.
The result is powerful protection for taxpayers. Rising home values do not automatically lead to higher tax bills, and no class of homeowners is favored over another. New buyers are not penalized, and longtime residents are not subsidized by their neighbors.
Utah’s system also brings clarity and accountability. Taxpayers can clearly see when a tax increase is proposed, why it’s happening, and which officials approved it—something assessment caps often obscure.
Stability, Fairness, and Transparency
Assessment caps often create tax “shock” when capped properties change hands, resetting assessments to market value overnight. Levy caps, by contrast, smooth tax growth over time, reducing volatility and making property taxes easier to plan for.
Just as importantly, levy caps reinforce good governance, especially when tied to Truth in Taxation and increased transparency. They require elected officials to prioritize spending, justify tax increases, and remain publicly accountable.
Assessment caps do protect some taxpayers, but are insufficient because they don’t control the source of our problem—the uncontrolled growth of government. Levy caps will do just that: they restrain tax growth directly, apply evenly, and make increases transparent. Our legislature deserves credit for prioritizing property tax reform for the last few legislative sessions, and progress has indeed been made. However, under the status quo, the property owners disadvantaged by assessment cap protections will inevitably cry out for help. To accomplish what voters are demanding, legislative leaders must return again to this issue and implement levy caps and transparency measures to complete a multi-year and holistic reform of the way property is taxed in Georgia.
