California SB 296: The Complete 2027 Disabled Veterans Property Tax Exemption Guide

California just made a major change to property tax relief for qualifying disabled veterans, and for some homeowners, the difference could mean thousands of dollars in property tax savings every year.

On September 28, 2026, Governor Gavin Newsom signed SB 296, expanding California's Disabled Veterans’ Property Tax Exemption beginning with the January 1, 2027 property tax lien date.

If you're a qualifying disabled veteran who owns a home in California, this is a law worth understanding.

And if you're thinking about buying a home in San Diego or elsewhere in California, this benefit could potentially change the long term cost of homeownership.

I'm Ryan Caron with The Caron Group at Real Broker. I work with a lot of Veterans and Service Members in San Diego, and I wanted to put together one straightforward guide explaining what SB 296 actually changes, who may qualify, how the numbers work and what veterans should be watching as counties prepare for 2027.

SB 296 at a Glance

Here are the biggest changes.

Effective: Beginning with the January 1, 2027 lien date

Standard expanded exemption: Generally 50% of the portion of a qualifying property's value up to $1 million

Maximum initial exemption at that level: Approximately $500,000 of taxable value before annual adjustments

Lower income exemption: 100% of the portion of value up to $1 million for qualifying households

Initial 2027 household income threshold: $83,474

Who may qualify: Certain disabled veterans, including veterans rated 100% disabled and veterans compensated at the 100% rate because they are unable to secure or follow substantially gainful employment, along with certain qualifying surviving spouses

Property requirement: The home generally must be the qualifying principal residence

Current duration of the new law: 2027 through the 2031 lien date

Those last two details are important.

SB 296 is not currently written as a permanent expansion. The new section remains in effect through the applicable lien dates before January 1, 2032 unless California changes the law again.

And the $1 million amount and applicable income thresholds are subject to adjustments under California law.

What Exactly Did SB 296 Change?

California already had a Disabled Veterans’ Property Tax Exemption before SB 296.

For the 2026 lien date, the State Board of Equalization lists:

Basic exemption: $180,671

Low income exemption: $271,009

Low income household limit: $81,131

For 2027, before considering the expanded SB 296 calculation, those inflation adjusted figures were scheduled to increase to:

Basic exemption: $185,889

Low income exemption: $278,836

Low income household limit: $83,474

SB 296 changes the calculation substantially for many qualifying homeowners.

Beginning with the January 1, 2027 lien date, the new law generally exempts 50% of the portion of the property's full value up to $1 million for an eligible veteran.

For an eligible veteran whose household income does not exceed the applicable threshold, the exemption increases to 100% of the portion of the property's full value up to $1 million.

That's a significant difference.

The $1 Million Rule Is Easy to Misunderstand

This is probably the most important part of SB 296 to explain correctly.

The law does not simply say that every qualifying disabled veteran receives a $1 million exemption.

For a qualifying veteran above the applicable household income threshold, the law generally exempts:

50% of the portion of the property's value up to $1 million.

So if the relevant property value is $1 million, the exemption could be approximately:

$500,000

If the relevant property value were $800,000, the calculation would generally be:

50% × $800,000 = $400,000 exemption

For qualifying lower income households, the calculation is much larger.

The law generally exempts:

100% of the portion of the property's value up to $1 million.

That could potentially eliminate the taxable value on that first $1 million, subject to the law's eligibility requirements and how the county assessor applies the exemption.

Important: Your Home's Market Value and Assessed Value Are Not Necessarily the Same

This is a distinction every California homeowner should understand.

Your home might be worth $1 million on the open market, but that does not automatically mean the county is taxing you on $1 million.

California operates under Proposition 13.

In general, a property's assessed value is established when a property changes ownership or new construction occurs. Annual increases to the factored base year value are generally limited to no more than 2%, although other rules and exceptions can apply.

That means two neighbors living in nearly identical homes can have very different assessed values depending on when they purchased their properties and other assessment events.

So when you're trying to estimate the benefit of SB 296, don't automatically use your Zillow value, an online home estimate or what you think your house could sell for.

Look at your actual assessed value and property tax bill.

That is a much better place to start.

How Much Could SB 296 Actually Save a Disabled Veteran?

Let's use a simplified example.

Assume a qualifying veteran has $1 million of taxable property value.

California's Proposition 13 base property tax rate is generally 1% of taxable assessed value, with additional amounts potentially added for voter approved debt and other charges.

Under the general 50% SB 296 calculation:

Property value: $1,000,000

Potential exempt amount: $500,000

Remaining taxable value: approximately $500,000

At the 1% base property tax rate, removing $500,000 of taxable value represents approximately:

$5,000 per year in base property tax

That's roughly:

$417 per month

But don't take that number and subtract exactly $417 from your mortgage payment.

Actual property tax bills can include voter approved debt, assessments, special taxes and other charges that may not disappear simply because the assessed value receiving the exemption changes.

The real savings need to be calculated using the actual property and tax bill.

What About a Lower Income Qualifying Veteran?

This is where SB 296 can become even more significant.

For the 2027 lien date, the household income threshold written into the new law begins at $83,474, subject to adjustment for the relevant assessment year.

If an eligible veteran's household income falls within the applicable limit, the exemption generally increases to:

100% of the portion of the property's value up to $1 million.

Using another simplified example:

Relevant property value: $900,000

Potential exemption: $900,000

That could potentially remove the entire $900,000 from taxable value for purposes covered by the exemption.

Again, that does not necessarily mean the homeowner's entire property tax bill becomes zero.

Other assessments or charges can still matter.

But this is potentially substantial property tax relief.

What Counts as Household Income?

This is another area where I would be careful about making assumptions.

San Diego County's current Disabled Veterans’ Exemption guidance explains that household income from the previous calendar year is considered for the low income exemption.

The County also states that Veterans benefits and Social Security benefits count toward household income for purposes of its current low income exemption calculation.

If you think you may qualify for the enhanced low income exemption, I would verify the current requirements directly with your County Assessor rather than assuming your taxable income from a tax return is the only number that matters.

Who Qualifies for the Expanded Disabled Veterans’ Exemption?

The law contains specific eligibility requirements.

Among the qualifying categories are veterans who are considered totally disabled because of an injury or disease incurred in military service.

SB 296 defines "totally disabled" to include a veteran whom the U.S. Department of Veterans Affairs or the military service from which the veteran was discharged has:

Rated the disability at 100%

or

Rated disability compensation at 100% because the veteran is unable to secure or follow a substantially gainful occupation.

That second category is important.

In practical terms, veterans receiving compensation at the 100% rate because of unemployability should not automatically assume they are excluded simply because their underlying combined disability rating isn't 100%.

The law's actual definition is broader than that.

The statute also includes certain veterans who are blind in both eyes or have lost the use of two or more limbs as a result of service related injury or disease, subject to its definitions and eligibility requirements.

Does the Home Have to Be Your Primary Residence?

Generally, yes.

The expanded exemption applies to qualifying property that is owned by and constitutes the veteran's principal place of residence, subject to the ownership provisions contained in the law.

This isn't designed as an exemption for a vacation home or ordinary investment property.

There is an important exception involving veterans confined to a hospital or other care facility.

Under SB 296, the property may still be treated as the veteran's principal residence if it would otherwise be their principal residence and it isn't rented or leased to a third party.

The statute specifically says a family member living in the residence is not considered a third party for this purpose.

What If My Spouse Owns the Home?

Don't automatically assume you don't qualify simply because of how title is held.

SB 296 contains several definitions covering ownership.

Depending on the circumstances, qualifying property can include property owned jointly with a spouse, property owned as community property and certain property held separately by the veteran or spouse.

It can also apply to the veteran's ownership interest when property is co-owned with other people.

Title and ownership questions can get complicated quickly, so this is another area where I would verify eligibility with the County Assessor based on the property's actual vesting.

What If Two Qualifying Disabled Veterans Own the Home?

SB 296 addresses this too.

If two or more qualifying veterans co-own a property in which they reside, the law provides that each may be entitled to the exemption to the extent of their ownership interest.

That's a detail many summaries of the law are likely to miss.

If this applies to your household, I would absolutely speak with the County Assessor about how it will be calculated.

Do Surviving Spouses Qualify Under SB 296?

Certain unmarried surviving spouses may qualify.

The law includes provisions for an unmarried surviving spouse of a deceased veteran when specific requirements are satisfied.

Depending on the circumstances, eligibility may include situations where the deceased veteran qualified, or would have qualified under specified rules, as well as certain situations where the veteran died from a service connected injury or disease as determined by the U.S. Department of Veterans Affairs.

The law also includes residency and principal residence requirements.

For surviving spouses, I would not rely on a social media post or general summary to determine eligibility.

Have the County Assessor review the actual circumstances.

There's Another SB 296 Rule Almost Nobody Is Talking About

Here's one of the most interesting details I found when reading the final law.

The new 50% calculation isn't automatically used in every situation.

For certain eligible veterans whose household income is above the applicable income threshold and whose property value does not exceed a specified amount, the law directs the property back to the existing exemption under Revenue and Taxation Code Section 205.5.

For 2027, the SB 296 statute lists that starting property value threshold as $371,778, subject to adjustment.

Why?

Because depending on the property's value, the existing basic exemption can actually provide a larger benefit than simply taking 50% of a lower assessed value.

Here's a simplified example.

Suppose the relevant property value were:

$300,000

Fifty percent would be:

$150,000

But the existing 2027 basic Disabled Veterans’ Exemption amount is scheduled at:

$185,889

In that situation, the existing exemption would be larger.

The law accounts for that.

This is one of the reasons I wouldn't reduce SB 296 to:

"Everyone gets 50% off."

The actual law is smarter and more nuanced than that.

Does SB 296 Stack With the Homeowners' Exemption?

Generally, no.

SB 296 specifically provides that its exemption is in lieu of certain other real property tax exemptions.

San Diego County's existing guidance similarly explains that homeowners cannot simultaneously receive both the Homeowners' Exemption and Disabled Veterans’ Exemption on the same residence.

So don't calculate your expected savings by simply stacking every exemption you've heard about.

The County Assessor determines which applicable exemption is placed on the property.

What If I Already Receive the Disabled Veterans’ Property Tax Exemption?

This is going to be one of the biggest questions heading into 2027.

My advice right now is simple:

Don't assume anything.

Don't assume your existing exemption will automatically convert to the new SB 296 calculation.

But also don't assume you'll necessarily need to start the entire process from scratch.

SB 296 requires claimants to provide the County Assessor with documentation sufficient to establish eligibility, including documentation from the VA or applicable military service demonstrating the disability rating.

County assessors will be responsible for administering the exemption, and implementation guidance will matter as we approach the January 1, 2027 lien date.

If you're in San Diego County, I would watch the San Diego County Assessor's Disabled Veterans’ Exemption page for updated instructions.

How Do I Apply for the Disabled Veterans’ Property Tax Exemption in San Diego County?

Currently, the San Diego County Assessor allows eligible homeowners to apply for the Disabled Veterans’ Exemption by email, mail or in person.

The County provides separate applications for the basic Disabled Veterans’ Exemption and the low income version.

San Diego County currently directs applications and questions to its Disabled Veterans’ Exemption Section.

Because SB 296 is brand new,