SB 296 changes the property-tax calculation for qualifying disabled veterans beginning with the 2027 lien date. For a San Diego owner deciding whether to stay or move, the useful question is how the new rules apply to the home, the household and the year being budgeted.
Governor Newsom signed the bill on September 28, 2026. Chapter 727, Statutes of 2026 adds Revenue and Taxation Code section 205.5.1. It provides a 50% exemption on a capped part of a qualifying home’s full value, a 100% tier for eligible lower-income households, and a separate rule directing some owners to the existing disabled veterans’ exemption.
The figures printed in the act are base amounts subject to annual adjustment. Confirm the applicable 2027 amounts and claim instructions before using the benefit in a purchase budget.
Plan for the 2027–28 bill and the current sunset
The act takes effect immediately as a tax levy, but its exemption applies to lien dates on or after January 1, 2027 and before January 1, 2032. That means the 2027 through 2031 lien dates, beginning with the 2027–28 annual property-tax bill. It does not change the 2026–27 bill, as the San Luis Obispo County Assessor’s implementation notice explains.
Section 205.5.1 is repealed on January 1, 2032 under the law as written. A long-term ownership budget should account for that end date rather than assume the new benefit continues indefinitely.
Confirm the veteran, ownership and principal-residence requirements
The property must be owned by and be the principal residence of the veteran, the veteran’s spouse, or the veteran and spouse jointly. The qualifying service-connected condition is blindness in both eyes, loss of use of two or more limbs, or total disability from injury or disease incurred in military service.
For total disability, section 205.5.1(c)(3) accepts a 100% disability rating from the VA or the military service from which the veteran was discharged. It also covers disability compensation rated at 100% because the veteran cannot secure or follow a substantially gainful occupation.
The section separately defines qualifying military service, discharge and VA benefit eligibility. Have the Assessor review the service and ownership records together with the rating evidence. A purchase using a VA loan and a property-tax exemption are separate determinations.
There is a principal-residence exception for a qualifying veteran confined to a hospital or care facility: the home must be where the veteran would otherwise live and cannot be rented or leased to a third party. A family member living there is not treated as a third party for this rule. The law includes a corresponding care-facility provision for an eligible surviving spouse.
Use the statutory base figures correctly
Section 205.5.1(a)(1) sets out the following veteran-owner rules. The surviving-spouse provisions contain the corresponding income and value rules.
| Rule | Base amount in the act | What to confirm for the assessment year |
|---|---|---|
| General new exemption | 50% of the part of full value up to $1,000,000. | The value cap is adjusted under section 205.5(i). |
| Lower-income tier | 100% of that capped part when household income does not exceed $83,474. | The income figure is adjusted under section 205.5(h); the value cap is also adjusted. |
| Existing-exemption route | If full value does not exceed $371,778 and household income exceeds $83,474, the property instead remains eligible under section 205.5. | Both figures are adjusted for the relevant year under the specified value and income provisions. |
The $1,000,000, $83,474 and $371,778 figures above are statutory base figures, not a statement of the final indexed amounts applicable to this new exemption for 2027. Those 2027 figures still need confirmation from the Board of Equalization’s annual letter and implementation guidance. Use the program’s household-income calculation rather than assuming a single number from a tax return settles eligibility.
The law uses the property’s full value. Ask the Assessor which value applies to the parcel and proposed ownership; a listing price or online estimate is not the calculation. Once the applicable value, cap and income tier are established, the percentage determines value exempted from taxation. Review the remaining parcel charges separately when estimating the total bill.
The Placer County Assessor’s 2027 overview corroborates the two possible percentage levels and cautions that eligibility, income requirements and further instructions apply.
Check the surviving-spouse and co-owner rules before changing title
An eligible unmarried surviving spouse can receive the same amount the veteran would have received, including the applicable income tier. The home must be the spouse’s principal residence and must have been the veteran’s principal residence when the veteran died.
Section 205.5.1(b) also requires one of its qualifying death-history conditions. The veteran must have qualified during life, fit the specified pre-2024 provision, or have died from an injury or disease the VA determined was service connected. The relevant conditions require California residency on January 1 of the year of death. Ask the Assessor to match the history to the applicable route.
The ownership definition accommodates specified interests held with a spouse or other owners. Relief for a partial interest is limited to that interest. If two or more qualifying veterans co-own the home in which they reside, each can receive the exemption to the extent of their interest.
The new exemption replaces the constitutional veterans’ exemption, section 205.5 relief and any other real-property exemption for that residence. It cannot be stacked with the homeowners’ exemption, including by giving another person a different real-property exemption on the same home. The qualifying-veteran co-ownership provision remains the specific exception described above.
Prepare the claim, then connect the result to the payment
Section 205.5.1(d) requires documentation sufficient to show eligibility, including a letter from the VA or the discharging military service demonstrating the disability rating. The San Diego County Assessor’s disabled veterans’ page is the local starting point. At this review, claim instructions specifically implementing the new section were not yet posted there.
Ask which records are needed for your ownership, occupancy and household income, which exemption route applies, and how an existing claim will be handled. Use the County’s instructions for the new section when available rather than assume an older form or deadline supplies the new process.
Send benefit and claim documents through the Assessor’s stated submission process. I do not need your VA medical or disability records to help compare homes. For our property discussion, the useful information is the home, your search timing and the monthly amount you are comfortable carrying.
A buyer needs a tax estimate for the proposed purchase. The seller’s bill belongs to the seller’s assessment and circumstances. Our San Diego ownership-cost guide explains why the assessment, supplemental taxes and parcel-specific charges belong in the same comparison.
If the sale also involves an assumable VA loan, use our VA seller’s next-move guide for the entitlement and liability questions. Resolve the tax claim alongside those financing decisions, with a budget that can carry the home while the Assessor and lender complete their work.
Once a reduction appears on the tax bill, coordinate that evidence with the mortgage servicer if it collects taxes through an impound account. San Diego County’s existing guidance directs owners to contact their lender for the corresponding payment adjustment.
What the state reporting provisions mean
The act calls for the Board of Equalization to collect available assessor data on exempted value and recipients and report to the Legislature by June 1, 2027, then annually until June 1, 2031. It provides no state reimbursement to local agencies for property-tax revenue lost under the act. A separate provision addresses administrative costs if the Commission on State Mandates determines reimbursement is required. These provisions do not change the homeowner eligibility or claim requirements.
Common questions
When does SB 296 affect property taxes?
The new exemption applies to lien dates from January 1, 2027 through January 1, 2031, beginning with the 2027–28 annual bill. It does not change the 2026–27 bill. The new section is repealed on January 1, 2032 under the law as written.
Does a 100% disability rating eliminate the whole property-tax bill?
The rating is one part of eligibility. The applicable exemption depends on the property, ownership, principal residence, household income and indexed amounts. The 100% tier applies to a capped part of full value, so review the Assessor’s calculation and remaining parcel charges before estimating the total payment.
Are $1,000,000 and $83,474 the final amounts to use for 2027?
They are base figures printed in the act, with annual adjustments required by section 205.5. The $371,778 existing-exemption threshold is adjusted too. Confirm the amounts applicable to 2027 from the Board of Equalization’s annual letter and implementation guidance before calculating relief.
Can an unmarried surviving spouse qualify?
Yes, when the statutory conditions are met. The property must be the spouse’s principal residence and have been the veteran’s principal residence at death. The qualifying service or death history and California residency conditions must also be established. The income and value rules determine the applicable amount.
Can I add this exemption to another exemption on the same home?
The new exemption is in lieu of the constitutional veterans’ exemption, section 205.5 and other real-property exemptions for the same residence. The law separately accommodates two or more qualifying veteran co-owners to the extent of their interests. Ask the Assessor which route applies and what documentation is required.
This guide reflects the chaptered SB 296 text and official assessor information reviewed October 18, 2026. Confirm current indexed figures, claim instructions and the property-specific calculation with the San Diego County Assessor before relying on a projected tax reduction.