What is a “circuit breaker” tax?

A “circuit breaker” tax, also known as a senior citizens’ property tax exemption, is a special tax provision for individuals who are 65 or older and meet certain income requirements. In Washington, this exemption applies to property taxes and can provide a significant savings for eligible seniors. The way a circuit breaker works is that it limits the amount of your total taxable income plus property tax to a certain percentage of your household income. Therefore, if the total exceeds the percentage, the excess tax amount is waived. For example, if your total taxable income and property tax are $12,000, and your household income is $40,000, then 30% of your income is $12,000. The excess $4,000 ($12,000 – $8,000) property tax would be waived. In Washington, the circuit breaker percentage is currently set at 60%. This percentage is adjusted annually according to the Consumer Price Index. Eligibility is based on your age and income. To qualify, you must be at least 65 years old and your total household income must be below a certain threshold as set by the state. In addition to the property tax exemption, Washington also offers other property tax relief programs such as reduced assessments and deferral loans. The programs vary by county, so seniors should check with their county’s Assessor’s Office for more information.

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What is a “circuit breaker” tax?

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