California SB 296: From 2027, a 100% Disabled Veteran's Home Is Half Exempt up to $1 Million, or Fully Exempt Under the Income Limit

For property tax lien dates from January 1, 2027 through January 1, 2031, a California veteran rated 100% disabled gets 50 percent of the home's full value exempt, on the first $1,000,000.00 of value, instead of today's flat exemption of $185,889.00. A veteran whose household income does not exceed $83,474.00 gets 100 percent of that value exempt. This is settled law: Governor Newsom approved SB 296 by Senator Bob Archuleta on September 28, 2026, and the Secretary of State chaptered it the same day as Chapter 727, Statutes of 2026. What is not settled is the paperwork. The State Board of Equalization has not published its instructions to county assessors, so how an existing exemption holder moves to the new amount is not known yet.

What section 205.5.1 says

The new section works "in lieu of the property exemption in Section 205.5," the disabled veterans' exemption California has used for decades. That older section exempts a fixed dollar amount. BOE's bill analysis of August 21, 2026 puts the 2027 figures at $185,889.00 for the basic exemption and $278,836.00 for the low-income exemption, for claimants with household income below $83,474.00. A $900,000.00 home and a $300,000.00 home got the same dollar break.

SB 296 turns that into a share of the home. Three tiers replace the two:

The $371,778.00 floor is exactly twice the basic exemption, so no one drops below the old amount: for a smaller home, half the value would be less than $185,889.00, and the law sends that owner back to section 205.5. The text ties each dollar figure to the annual inflation adjustment in section 205.5 for later years.

Who qualifies

The disability test does not change. The veteran must be "blind in both eyes," have "lost the use of two or more limbs," or be "totally disabled," which the statute defines as VA or the discharging service rating the disability at 100 percent, or rating the compensation at 100 percent because the veteran is unable "to secure or follow a substantially gainful occupation." Individual unemployability counts. A 90% rating does not.

The home must be owned by the veteran, the spouse, or both, and be the principal place of residence. The claimant must give the assessor "a letter from the United States Department of Veterans Affairs" or the service showing the rating. The exemption also replaces "any other real property tax exemption," so it does not stack with the homeowners' exemption on the same house.

Surviving spouses keep the same amount the veteran would have received, with one new condition BOE flagged: the veteran "must have been a resident of this state on January 1 of the year in which they died."

What it is worth, by assessed value

Full value here is the assessed value on your tax bill, usually far below market price under Proposition 13. BOE prices the exemption at "the 1% property tax rate," and the table does the same; local voter-approved rates on your bill add a little more. BOE estimates the average totally disabled veteran's home at $407,447.00 of assessed value, which is the third row.

The gain grows with the home and stops at $1,000,000.00 of value. A low-income owner of a $1,300,000.00 home still pays tax on $300,000.00. BOE counted 91,545 veterans on the basic exemption in 2025-26, with the most claims in San Diego (17,778 exemptions in 2025) and Riverside (12,394) counties, and puts the statewide cost at about $197 million a year, $31 million more than current law.

The income line: VA compensation and retired pay both count

The 100% tier turns on household income, and California counts money the IRS does not. BOE's analysis of SB 888 lists what the claim form BOE-261-G treats as household income, including "Veterans' benefits received from the USDVA" and "Pensions, annuities, and disability retirement payments." SB 888, which would have excluded disability compensation, was held in the Senate Appropriations Committee, so VA pay still counts.

Twelve months of the 100% rate effective December 1, 2025 is $47,262.96 for a veteran alone and $49,898.04 with a spouse. That leaves $33,575.96 of room under $83,474.00 for a married veteran's retired pay, the spouse's wages and everything else. A retiree with 20 years and a 100% rating draws both checks in full under concurrent retirement and disability pay, so the grade decides the tier.

The retired pay column is a stand-in: half of 2026 basic pay at over 20 years, the legacy High-3 multiplier at 20 years. A real High-3 averages 36 months and runs lower, and a Blended Retirement System retiree gets 40 percent at 20 years, so more retirees may fall under the line than the table shows. Any spouse paycheck pushes the other way. Get your own number from the High-3 calculator, the concurrent receipt calculator and the VA disability calculator.

Filing and timing

The first lien date under the new law is January 1, 2027, so it shows on the 2027-28 tax bill. Under current BOE rules a low-income claim filed between January 1 and February 15 receives the full exemption, and later claims get 90 percent through December 10 and 85 percent after. BOE's exemption page did not mention SB 296 on November 8, 2026, so watch your county assessor's page for the claim form. If you are buying, the VA loan calculator and BAH calculator show the payment side of the same house.

VA rates are the 2026 schedule (effective December 1, 2025) and basic pay is the FY2026 DFAS table. Always verify with your county assessor and your finance office before making financial decisions.