What is a “circuit breaker” tax?

A “circuit breaker” tax is a tax credit program available in some states that helps seniors or individuals with disabilities pay property taxes. It operates like a circuit breaker in an electrical system, with a “trigger” that is set at a certain amount, and if the taxpayer’s property tax exceed the set amount, the taxpayer can be eligible to receive a credit or a refund. In New Mexico, the Senior Property Tax Circuit Breaker Program provides a credit to eligible senior citizens and disabled persons who own a residential dwelling in the state and pay property tax on it. The credit amount is limited to the amount of property taxes (including any lease or rental taxes) that exceed 3.75% of the taxpayer’s total household income. To be eligible, seniors must be age 65 or older, or disabled, and have an gross annual income of $27,000 or less. The credit amount does not exceed $1500 for each fiscal year. This program is a benefit to many seniors living on a fixed income, since the credit helps them pay for their property taxes and remain in their homes.

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What is a “circuit breaker” tax?

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