G.S. 105-277.1B · FindMyMoney.App

Quick Facts

What it does: Caps the current-year property tax bill for older adults and residents with permanent disabilities so they never pay more than a fixed share of household income. Any tax that exceeds the cap is deferred and may be repaid when ownership ends.
Why it matters: North Carolina’s rapidly rising housing values can push fixed-income households out of their homes. The circuit breaker stops sudden spikes, stabilizes budgets, and lets families age in place while maintaining eligibility for other relief programs.
Key thresholds: Tier 1 applies when total income is $36,700 or less (2025 limit) and caps the bill at 4% of income. Tier 2 covers incomes between $36,701 and $55,050 and caps liability at 5%. Tier 3 extends to $73,400 and uses a 6% cap. Income limits adjust annually with the cost of living index published by the North Carolina Department of Revenue.
How it interacts with other relief: You can claim either the circuit breaker or the exclusion (the $25,000 or 50% homestead exclusion) or the disabled veterans exclusion in a given tax year, but not more than one. Choosing the circuit breaker is ideal for homeowners in high-value counties with lower incomes where taxes are already more than 4–6% of household resources.

Program Overview

The circuit breaker is a statewide property tax deferment authorized by North Carolina General Statute 105-277.1B and administered locally by each county tax office. Unlike a traditional exemption that permanently removes value from the tax roll, this program caps what you must pay now and postpones the remainder. Deferred taxes do not accrue interest while you remain eligible and continue to live in the home, effectively turning the county into an interest-free lender to bridge the affordability gap.

Understanding the mechanics is essential. The county calculates your full property tax bill, including municipal levies and special assessments, and then compares it to your qualifying income from the prior year. If the bill exceeds the income-based percentage, the excess is deferred. For example, a Tier 1 household with $30,000 of income would be responsible for $1,200 (4%) even if their nominal tax was $3,500; the $2,300 remainder is recorded as a deferred lien. The deferment applies only to taxes on the permanent residence and up to one acre of land (more acreage may qualify if the home site historically included it and has not been subdivided).

Because the circuit breaker is a deferment rather than an outright exemption, long-term planning is crucial. Deferred taxes become payable with interest at the federal discount rate when a disqualifying event occurs, such as selling the property, changing its use, or failing to occupy it as a primary residence. However, if you continue to meet the requirements for three consecutive years, and then your heirs inherit and promptly sell, the state forgives the most recent three years of deferred taxes. This forgiveness clause is a powerful estate planning tool that protects families from sudden repayment demands during a transition.

Eligibility Requirements

To qualify you must satisfy several statutory requirements:

Ownership and residency: You (and if married, your spouse) must have owned and occupied the dwelling as your permanent residence for at least the five calendar years immediately preceding January 1 of the year for which relief is requested. The property must be your legal residence and you cannot claim a similar relief in another state.
Age or disability: At least one owner must be age 65 or older or totally and permanently disabled. Disability must be certified by a licensed physician using the county’s prescribed form.
Income test: Total income is the sum of federal adjusted gross income plus nontaxable items such as Social Security, pensions, workers’ compensation, and public assistance. The Department of Revenue publishes the annual limits for each tier; counties apply those figures uniformly. Household income includes the applicant and spouse even if the property is titled solely in one name.
No conflicting benefits: You cannot receive the circuit breaker in the same year as the homestead exclusion or the disabled veteran exclusion. Carefully evaluate which option delivers the best outcome based on your home value and income level.

Benefit Details

Cap amounts: Tier 1 households pay at most 4% of income, Tier 2 pays 5%, and Tier 3 pays 6%. Counties automatically apply the lowest applicable tier once they verify your income.
Deferred tax ledger: The county maintains a running total of the deferred amount. Statements showing current and cumulative deferrals are mailed annually, providing transparency so you can track the potential obligation.
Repayment triggers: Deferred taxes become due with interest if you move out, rent the property, transfer ownership, or pass away without a qualifying co-owner continuing to meet requirements. Interest is calculated from the original due date using the federal discount rate published by the Treasury in effect when the taxes were first deferred.
Forgiveness provision: If the owner dies and the property is inherited by a co-owner or heir who sells within one year, the county cancels the most recent three years of deferred taxes. Older deferred amounts must be settled at closing from sale proceeds.
Portability: Relief applies only to the current residence. If you sell and buy another home, you must reapply after reestablishing five consecutive years of residency at the new property.

Application Process

Gather proof of age or disability. Acceptable documents include a driver’s license, birth certificate, or disability certification (Form AV-9A). Disability statements should include the physician’s license number and explicitly confirm permanence.
Collect income documentation. Assemble federal and state tax returns, Social Security 1099s, pension statements, VA benefit letters, and any other proof of household income for the preceding calendar year. Keep copies because counties often conduct audits.
Complete Form AV-9. This statewide homestead application is used for the exclusion, circuit breaker, and disabled veteran relief. Indicate the circuit breaker option, select the appropriate tier if known, and sign in the presence of a notary or county tax official.
Submit to the county tax assessor by June 1. Some counties accept electronic submissions; others require in-person or mail delivery. Always request a stamped receipt. Late applications may be considered for good cause but approval is not guaranteed.
Respond to verification requests. Counties may ask for additional documentation or schedule a home visit to confirm occupancy. Reply promptly to prevent delays or denial.
Renew each year. Counties send recertification forms in January. You must reconfirm income annually; failing to return the form results in removal from the program.

Required Documentation Checklist

Government-issued photo ID verifying age.
Proof of residency such as utility bills, voter registration, or North Carolina driver’s license showing the property address.
Recorded deed or title documents demonstrating ownership.
Physician certification for disability (if applicable).
Complete federal and state tax returns, or an affidavit explaining why you were not required to file.
SSA-1099, 1099-R, VA benefit letters, and statements for other nontaxable income.
Notarized Form AV-9 with all owner signatures.
Evidence of any legal life estates, trusts, or joint tenancies affecting ownership.

Strategic Considerations for Homeowners

Compare relief options annually

Use a spreadsheet to calculate your net savings under the circuit breaker versus the standard homestead exclusion. The exclusion removes either $25,000 or 50% of the home’s value (whichever is greater) from taxation, which can outperform the circuit breaker if your home has a modest assessed value but you are near the income cap. Conversely, the circuit breaker shines in high-tax jurisdictions like Orange, Wake, and Mecklenburg counties where mill rates and valuations are high.

Plan for potential repayment

Keep a running log of the deferred balance. Consider setting aside a small reserve in a high-yield savings account so repayment is manageable if you decide to move. Include the deferred balance as a liability in estate planning documents so heirs are prepared during probate.

Protect eligibility

Avoid renting out rooms through short-term rental platforms unless you verify with the county that incidental rentals do not jeopardize your primary residence status. Notify the assessor immediately if you change mailing addresses or spend extended time away for medical care; counties may request additional documentation to confirm continued occupancy.

Coordinate with reverse mortgages and HELOCs

If you use a reverse mortgage or home equity line of credit, inform the lender about the deferred taxes. Some lenders require proof that property taxes are current; the circuit breaker keeps taxes current because the required portion is paid, but deferred amounts may need to be disclosed. Work with an attorney to ensure loan covenants are not violated.

Maximizing the Benefit

Time capital improvements. Major renovations can raise assessed value. Plan improvements after submitting your annual application so you have time to analyze the impact and explore appealing the new assessment.
Leverage community partners. Local Councils on Aging, legal aid offices, and VITA tax volunteers often host property tax relief clinics in the spring. Attending can help you double-check calculations and prepare supporting documents.
File appeals when necessary. If your assessed value spikes, file a timely appeal. Lowering the base assessment reduces both the portion you pay and the deferred balance, giving you more flexibility if you later repay the lien.
Use automatic payments. Counties typically allow autopay for the portion you owe. Setting up automatic drafts prevents late fees and protects your standing in the program.
Document caretaking arrangements. If you temporarily move into a rehabilitation facility but intend to return home, keep documentation from healthcare providers to demonstrate the absence is temporary. This helps preserve eligibility when a home health aide or family member occupies the residence during your recovery.

Coordinating with Other Programs

Energy and weatherization assistance: Pair the circuit breaker with North Carolina’s Weatherization Assistance Program or Duke Energy’s Share the Warmth grants to reduce utility costs and make staying in the home more affordable.
Property tax relief for disabled veterans: If you qualify for the veteran’s exclusion (which exempts up to $45,000 of value), calculate whether it provides greater relief. You can switch between programs in future years if your circumstances change.
Local payment plans: Some counties offer monthly installment plans for the portion you must pay. Enrolling can smooth cash flow and simplify budgeting alongside Social Security deposits.
Medicaid estate recovery: Deferred taxes count as a lien against the property. If you anticipate needing Medicaid long-term services, discuss the interaction between deferred taxes and estate recovery with an elder law attorney. In many cases, the three-year forgiveness reduces exposure if heirs sell promptly.

Example Scenarios

Retired couple in Wake County: Linda and Marcus own a home assessed at $520,000 with an annual tax bill of $4,800. Their combined income is $34,500, placing them in Tier 1. They pay $1,380 (4%) and defer $3,420. They track the deferred balance, and their estate plan instructs their children to sell within a year of their deaths so the last three years are forgiven.
Single homeowner in Buncombe County with disability: Carla receives Social Security Disability Insurance and a small pension totaling $42,000, placing her in Tier 2. Her property tax bill is $3,000, but the circuit breaker limits her payment to $2,100. She works with Pisgah Legal Services to review her application each year and uses the savings to fund accessibility upgrades.
Grandparent caregiver considering relocation: James wants to move closer to his grandchildren in another county. He projects the deferred balance after eight years will be $17,000. By consulting a HUD-certified housing counselor, he builds a budget that earmarks home sale proceeds to clear the lien while leaving enough for a down payment on a smaller condo.

Troubleshooting and Common Pitfalls

Missing the June 1 deadline: Submit early and confirm receipt. Counties may grant extensions only for extraordinary circumstances.
Underreporting income: The Department of Revenue cross-checks with income tax filings and SSA records. Inaccurate reporting can lead to removal and immediate repayment with interest. Maintain meticulous records.
Trust or life estate ownership: If the property is held in a trust or life estate, ensure the applicant is the beneficiary with present use. Provide trust documents so the assessor can verify eligibility. Failure to do so can delay approval.
Change in marital status: Marriage, divorce, or death of a spouse can alter income calculations. Notify the assessor immediately and submit updated documentation to prevent retroactive disqualification.

Resources and Support

North Carolina Department of Revenue Property Tax Relief Programs
County tax offices (search “[County Name] tax assessor circuit breaker” for contact details)
North Carolina Senior Law Project helpline (1-877-579-7562)
Local Area Agency on Aging benefit counselors
Volunteer Income Tax Assistance (VITA) sites for help compiling income documents

Key Takeaways

Staying in your home on a fixed income becomes more feasible when you leverage the circuit breaker. By understanding the eligibility rules, proactively managing the deferred balance, and coordinating with other supports, you can prevent property taxes from undermining your retirement budget. Approach the application like an annual financial audit: gather documentation early, compare relief options, and consult local experts. Over time the program becomes a cornerstone of your housing stability plan, providing predictable payments even as property values climb across North Carolina.