While a CR X monster is a "challenge" for a party of 4 characters, a "challenge" means the party is going to win and nobody on the party is likely to die and the monster is going to die. The party will use up some resources.
A "deadly" encounter is 1.5 CR X monsters for a party of 4 characters. That is where the party is still likely to win, but there is a really decent chance a party member dies.
One could argue that an "even" fight, where it is a toss up who wins, is probably around 2 CR X monsters for a party of 4 level X characters.
The various advanced encounter building rules mostly have you add up the CR of monsters, divide by the number of players, and multiply by 4, with some small amounts of math fudging.
Afterwards, a value of 2/3 is "easy", 1.0 is "challenging", and 1.5+ is "deadly".
The exception is that you aren't supposed to use monsters with individual CR much above the party's level; this is probably because the spike damage gets out of hand.
But, based off those numbers, a level X character is "even" with a half of a CRX monsters, or is roughly CR X/2.
So Polymorph takes a CR X/2 player character and converts them to a CR X creature at the cost of concentration, until the CR X creature drops.
Using a limit of level/X would mean that polymorph, at the cost of a level 4, spell slot, gives you a separate pool of HP/resources to consume, without granting a significant boost in offensive power over not using it. If well chosen, it would grant a more appropriate form to the situation.
It is a very powerful spell. Unlike many spells, it gets more powerful as you gain levels, as it remains a level 4 spell slot for a target-scaling amount of effect.
A T-Rex is usually going to be much more effective in a combat than a level 8 Fighter; and when it drops you get your Fighter back.
If your DM is concerned about this, change it to something like:
The new form can be any beast up to CR 8, whose challenge rating is less than the target’s (or 4 plus half the target’s level, if it doesn't have a challenge rating).
At higher levels: The CR limit is twice the spell level, and the CR for creatures with levels is equal to the spell level plus half the target's level.
So a level 10 fighter could be polymorphed into a T-Rex (4+10/2 = 9, > 8) with a level 4 spell. A level 8 fighter can be polymorphed into a T-Rex (5+8/2 = 9, > 8) with a level 5 spell slot.
That slight delay in access to higher-CR forms, and increased cost to use higher-CR polymorph forms, should make the spell still strong and usable as a "buff", but not as crazy as it is right now.