California lawmakers are moving closer to sharply expanding property tax relief for veterans with the most severe service-connected disabilities, potentially cutting thousands of dollars from annual bills for qualifying homeowners. Senate Bill 296 passed the California Assembly in a 78-0 vote on August 19 and has returned to the Senate, where lawmakers must concur with amendments made by the Assembly before it can be sent to Democratic Governor Gavin Newsom. The measure previously passed the Senate 38-0 in May 2025.
Under the latest version of SB 296, qualifying disabled veterans would receive an exemption on 50 percent of the first $1 million of their home's taxable value. Veterans whose household income is no more than $83,474 would instead receive a 100 percent exemption on the first $1 million. The income threshold and $1 million cap would be adjusted for inflation in subsequent years.
The proposal represents a significant expansion of California's existing disabled veterans' property tax exemption, although it is narrower than earlier versions of SB 296 that would have completely exempted qualifying homes, regardless of value or income. California already provides property tax relief to veterans who meet its definition of a disabled veteran. For the 2027 lien year, the existing basic exemption will shield $185,889 of a home's assessed value, while an enhanced exemption of $278,836 is available to qualifying households with income below $83,474, according to the California State Board of Equalization.
SB 296 would substantially increase those amounts between the 2027 and 2031 lien years. For example, an eligible veteran above the income threshold whose home has an assessed value of $800,000 would generally have $400,000 of that value exempt under the bill. A qualifying veteran below the income limit would have the entire $800,000 exempt.
For homes worth more than $1 million for tax purposes, the benefit would be capped. A lower-income veteran with a $1.2 million assessed home, for example, could exempt the first $1 million, leaving $200,000 subject to property tax. A veteran above the income threshold could exempt $500,000, the equivalent of 50 percent of the $1 million cap.
There is also a safeguard for higher-income veterans with homes valued at $371,778 or less: they would remain eligible for the existing exemption rather than potentially receiving a smaller benefit under the 50 percent calculation. Eligible unmarried surviving spouses would generally be able to receive the expanded relief as well. The bill states that its purpose is to help reduce veteran homelessness by lowering housing costs for severely disabled veteran homeowners.
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