Circuit breaker (property tax)

A circuit breaker is a income tax refund in the United States given to low income individuals and families whose property tax liability is a large percentage of their yearly income. The term was coined by John Shannon of the Advisory Commission on Intergovernmental Relations in the 1960s. The term suggests that, just as an electrical circuit breaker will prevent an electric circuit from being overloaded with energy, the refund prevents low-income households from being overloaded with tax burden.

There are currently 18 states who use a wide scope of programs to relieve the property tax burden for low income individuals and families. As a refund, these programs require low income households to pay the entire property tax up-front then a credit or refund is given during the income tax processing, which requires relief is given after the property taxes are paid. The locality levying the property tax and utilizing the revenue does not see a decrease in revenue from property taxes; rather, the state government passes down relief for those property taxes that are paid.