California Will Exempt Half of the First $1 Million of a Disabled Veteran's Home Value Starting in 2027

Where it stands

1. ✓

   Sep 28, 2026

   Governor Newsom signs SB 296

2. Jan 1, 2027

   New exemption applies, starting with this lien date

3. Jan 1, 2032

   Exemption no longer applies to lien dates from this date

1. ◆

   What happened

   Governor Newsom signed SB 296 on September 28, 2026. It adds section 205.5.1 to California's Revenue and Taxation Code and applies to property tax lien dates from January 1, 2027 through 2031, ending before January 1, 2032. For most qualifying veterans it replaces the existing Disabled Veterans' Exemption.

2. ◷

   What changes

   The current exemption is a fixed dollar amount off assessed value: for 2027, $185,889, or $278,836 for households at or under the $83,474 income limit, according to the Board of Equalization. Under SB 296, the exemption is 50% of the part of the home's full value that does not exceed $1,000,000. For a household at or under the income limit, it is 100% of that part. The $1,000,000 cap and the income limit are both adjusted for inflation each year. One group stays on the current exemption: veterans whose income is above the limit and whose home's full value is $371,778 or less (also adjusted yearly). Half of $371,778 is the same $185,889 as the basic exemption. The new exemption is in place of any other real property tax exemption you could claim. Board staff estimated local governments would forgo about $197 million a year under the new rules, about $31 million more than under the current exemption, and the state does not repay them.

3. ⌂

   Who it affects

   Veterans whose California principal residence is owned by the veteran, the veteran's spouse or both, and who are totally disabled by an injury or disease from military service, or who are blind in both eyes or have lost the use of two or more limbs from a service injury or disease. Unmarried surviving spouses can qualify, generally if the veteran qualified or died of a service-connected condition and lived in California on January 1 of the year of death. You have to give the county assessor documentation, including a VA or military letter showing the disability rating.

4. ✓

   What it could mean for a home loan

   Property taxes are usually paid through escrow and count in your debt-to-income ratio, so a larger exemption can lower your monthly payment once it shows on your tax bill and your servicer recalculates escrow.

5. ◇

   What to do now

   Ask your county assessor whether you need to file again for the 2027 lien date. Our guide to property tax exemptions for disabled veterans covers the rules in other states.