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Tiamat has the Limited Magic Immunity trait, I know that much.

Unless she wishes to be affected, Tiamat is immune to spells of 6th level or lower. [...]

However, the last portion of the 5th level spell Circle of Power states:

Additionally, when an affected creature succeeds on a saving throw made against a spell or magical effect that allows it to make a saving throw to take only half damage, it instead takes no damage if it succeeds on the saving throws.

I understand that a dragon's breath weapon is technically nonmagical, but we treat it as magic in our campaign.

The spell has a range of self, and clearly indicates which creatures are "affected." So in this case, if somebody in the circle succeeded on the save vs the breath weapon, would they take any damage?

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No, because her breath is not Tiamat

The prevailing opinion is that the breath weapon is not part of Tiamat, so it does not share her immunity, sidestepping the issue of what immunity does, or does not do. If you treat the breath weapon as magical or not does not matter then, as the immunity does not apply.

This is based on an argument that if you treated a breath weapon as "part of" the creature, it would subject the creature to the effects of a prismatic wall when exhaled at one, which is highly unintuitive.

Apart from that, if the DM decided to treat the breath as part of Tiamat, like they do treat it as magical, we'd not know what the outcome is. That is because spell immunity is never explained in the rules. The instances where the mechanics of immunity are discussed in the PHB and DMG are about immunity to a damage type, not to spells. We do not know if immunity to spells means that spells only cannot affect the creature's body, mind, spirit or soul, or if it means the creature ignores effects of the spells entirely, as if they did not exist, even if the creature is not the target of the spell like with buffs or protection spells. It would be up to the DM.

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No, your allies won't take any damage

Circle of power affects you and your allies. Tiamat's Limited Magic Immunity does not interact with the protection provided by the circle because it's not affecting her.

However, Tiamat may or may not to be affected by your circle of power if she is your ally.

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    \$\begingroup\$ That's the biggest "if" I've seen for a long time. \$\endgroup\$
    – EvilSnack
    Aug 3, 2023 at 19:34

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