The California Constitution provides that all property is taxable, and requires that it be assessed at the same percentage of fair market value, unless otherwise provided by the California Constitution or federal law. The California Constitution and existing property tax law provide various exemptions from taxation, including, among others, a disabled veterans exemption and a veterans organization exemption.

This bill would exempt from taxation, property owned by, and that constitutes the principal place of residence of, a veteran, the veterans spouse, or the veteran and the veterans spouse jointly, if the veteran is 100% disabled. The bill would provide an unmarried surviving spouse a property exemption in the same amount that they would have been entitled to if the veteran was alive and if certain conditions are met. The bill would require certain documentation to be provided to the county assessor to receive the exemption and would prohibit any other real property tax exemption from being granted to the claimant if receiving the exemption provided by the provisions of this bill. The bill would make these exemptions applicable for property tax lien dates occurring on or after January 1, 2025, but occurring before January 1, 2035. By imposing additional duties on local tax officials, the bill would impose a state-mandated local program.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would state that it is the intent of the Legislature to apply those requirements to the bill and would set forth specified information relating to those requirements.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

This bill would take effect immediately as a tax levy.

The California Constitution provides that all property is taxable, and requires that it be assessed at the same percentage of fair market value, unless otherwise provided by the California Constitution or federal law. The California Constitution and existing property tax law provide various exemptions from taxation, including, among others, a disabled veterans exemption and a veterans organization exemption.

This bill would exempt from taxation, property owned by, and that constitutes the principal place of residence of, a veteran, the veterans spouse, or the veteran and the veterans spouse jointly, if the veteran is 100% disabled. The bill would provide an unmarried surviving spouse a property exemption in the same amount that they would have been entitled to if the veteran was alive and if certain conditions are met. The bill would require certain documentation to be provided to the county assessor to receive the exemption and would prohibit any other real property tax exemption from being granted to the claimant if receiving the exemption provided by the provisions of this bill. The bill would make these exemptions applicable for property tax lien dates occurring on or after January 1, 2025, but occurring before January 1, 2035. By imposing additional duties on local tax officials, the bill would impose a state-mandated local program.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would state that it is the intent of the Legislature to apply those requirements to the bill and would set forth specified information relating to those requirements.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

This bill would take effect immediately as a tax levy.

The California Constitution provides that all property is taxable, and requires that it be assessed at the same percentage of fair market value, unless otherwise provided by the California Constitution or federal law. The California Constitution and existing property tax law provide various exemptions from taxation, including, among others, a disabled veterans exemption and a veterans organization exemption.

This bill would exempt from taxation, property owned by, and that constitutes the principal place of residence of, a veteran, the veterans spouse, or the veteran and the veterans spouse jointly, if the veteran is 100% disabled. The bill would provide an unmarried surviving spouse a property exemption in the same amount that they would have been entitled to if the veteran was alive and if certain conditions are met. The bill would require certain documentation to be provided to the county assessor to receive the exemption and would prohibit any other real property tax exemption from being granted to the claimant if receiving the exemption provided by the provisions of this bill. The bill would make these exemptions applicable for property tax lien dates occurring on or after January 1, 2025, but occurring before January 1, 2035. By imposing additional duties on local tax officials, the bill would impose a state-mandated local program.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would state that it is the intent of the Legislature to apply those requirements to the bill and would set forth specified information relating to those requirements.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

This bill would take effect immediately as a tax levy.

SENATE COMMITTEE ON REVENUE AND TAXATION

Senator Jerry McNerney, Chair

2025 - 2026 Regular

Property taxation: exemption: disabled veteran homeowners

Enacts a full exemption from property tax for disabled veterans.

Background

The California Constitution provides that all property is taxable unless explicitly exempted by the Constitution or federal law. The Constitution limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, plus any locally-authorized bonded indebtedness. Assessors reappraise property whenever it is purchased, newly constructed, or when ownership changes.

The Constitution allows the Legislature to partially or wholly exempt from property tax the value of a disabled veteran’s principal place of residence if the veteran has lost two or more limbs, is totally blind, or is totally disabled as a result of a service-connected injury. The taxpayer must have served in the United States Army, Navy, Air Force, Space Force, Coast Guard, or Marine Corps and been discharged under conditions other than dishonorable. This disabled veterans’ exemption is available to disabled veteran taxpayers or their unmarried surviving spouses, so long as the surviving spouse receives a U.S. Department of Veterans Affairs (USDVA) determination that the spouse’s death was service-connected. The exemption applies instead of other real property exemptions, like the homeowners’ exemption.

Current law defines “totally disabled” to mean that either the USDVA or the military service from which the veteran was discharged has rated the disability at 100 percent, or has rated the disability compensation at 100 percent by reason of being unable to secure or follow a substantially gainful occupation. State law also contains specific definitions for blindness and the loss of two or more limbs.

State law implementing the exemption doesn’t fully exclude the value of a disabled veteran’s property, instead enacting a partial exemption of $100,000 for disabled veteran taxpayers with annual household income of more than $40,000, or $150,000 for income lower than that amount, with each threshold adjusted for inflation by the Department of Industrial Relations using the California Consumer Price Index for all items. The current inflation-adjusted value of the exemption for 2025 is $175,298 for disabled veterans with income above $78,718, and $262,950 for those with income below $78,718.

Seeking to provide additional benefits for disabled veterans, the author wants to increase the amount of the existing disabled veterans' exemption from a partial exemption where taxpayers can claim one of two amounts based on income to a full exemption.

Proposed Law

SB 23 enacts a full exemption from property tax for disabled veterans, using the same definitions that apply to the existing partial exemption. SB 23 additionally requires the claimant seeking the exemption to provide the County Assessor with documentation, including a letter from USDVA or the military service from which the veteran was discharged to demonstrate the veteran’s disability rating and establish eligibility for the exemption. SB 23’s full exemption applies to lien dates starting on January 1, 2025 and ending January 1, 2035.

State Revenue Impact

The Board of Equalization (BOE) estimates that SB 23 will result in an additional property tax revenue loss of $192 million.

Comments

1. Purpose of the bill. According to the author, “SB 23 will exempt the primary residences of veterans who have received a 100% disability rating from the Department of Veterans Affairs from property taxes in the state of California. Additionally, it will extend the same exemption to an unmarried surviving spouse, providing the same benefit to that the veteran would have been entitled to if alive, provided they meet the necessary conditions. Current California law offers a property tax exemption to 100% disabled veterans, but it does not adequately address the financial challenges faced by the veteran community, particularly with ongoing rise in the cost of living. SB 23 aims to alleviate these challenges and provide financial stability to veterans who struggle to secure sufficient income to afford median home prices.”

2. No income test. Generally, property tax exemption amounts do not depend on the taxpayer’s income. However, the current bifurcated disabled veterans’ income-based exemption amounts were enacted by the Legislature when it allowed a greater exemption ($15,000 at the time) for disabled veterans with income sufficiently low to qualify for the Property Tax Postponement program (AB 955, Mangers, 1978). The Legislature maintained the distinction when it fixed the current exemption amounts (SB 320, Royce, 1989) and later applied inflation adjustment (SB 1362, Poochigian, 2000). SB 23’s larger exemption does not incorporate this distinction, instead allowing a full exemption for all qualified disabled veterans. As a result, the bill could increase the benefit received by those disabled veterans who have sufficient income to meet current tax obligations despite their disability. However, the bill’s greater disabled veterans’ exemption reduces taxes for those who have sacrificed greatly for their country. Furthermore, the benefit would likely be easier for Assessors to administer because they would no longer have to verify the taxpayer’s income. The Committee may wish to consider whether the amount of the disabled veterans’ exemption should depend on the disabled veteran’s income.

3. Coming home. According BOE, disabled veteran taxpayers claimed almost $12 billion in exemptions in 2023-24. Across California, the counties of San Diego (17,778), Riverside (12,394), San Bernardino (5,897), Los Angeles (5,634), and Sacramento (4,133) have the most disabled veterans’ exemptions claimed in 2025. The number of exemptions has increased significantly in recent years: in 2018, San Diego had only 6,490, Riverside only 4,895, Los Angeles 3,332, San Bernardino 2,817, and Sacramento 2,660.

4. Related legislation. Governor Newsom’s Proposed 2025-26 Budget proposes to exclude from income for state tax purposes: (1) retirement pay received by a taxpayer from the federal government for service in the uniformed services; and (2) annuity payments received by a qualified taxpayer pursuant to a Department of Defense Survivor Benefit Plan. The exemption would apply for up to $20,000 of military retirement income. Additionally, the exemption would be limited to taxpayers with up to $250,000 in income if filing jointly and up to $125,000 in income for single filers. The proposal is estimated to reduce revenues by $130 million in 2025-26 and by $85 million annually thereafter.

Additionally, the Committee will likely consider several measures adding or enhancing tax benefits for military veteran taxpayers:

• SB 1 (Seyarto) enacts the Military Services Retirement and Surviving Spouse Benefit Payment Act, which excludes two forms of military retirement income from state income tax. SB 1 is identical to the Governor’s Budget proposal. The Committee will also hear the measure at its 3/12/25 hearing.
• SB 56 (Seyarto) provides that service-connected disability benefits do not count toward income for the purposes of determining whether the higher or lower disabled veterans’ exemption amount applies. The Committee will also hear the measure at its 3/12/25 hearing.
• SB 296 (Archuleta) is substantively identical to this bill and is currently pending in the Senate Revenue & Taxation Committee.
• SCA 4 (Archuleta)/SB 623 (Archuleta) amends the California Constitution to allow additional property tax benefits for taxpayers eligible for the disabled veterans’ or veterans’ exemptions from property tax. SCA 4 is currently pending referral in the Senate Rules Committee.

5. Section 41. Section 41 of the Revenue and Taxation Code requires any bill enacting a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve and detailed performance indicators, along with data collection and reporting requirements (SB 1335, Leno, 2014). To comply with Section 41, SB 23:

• States that its goal, purpose, and objective is to reduce homelessness by providing a tax exemption to 100 percent disabled veteran homeowners.
• Directs BOE, to the extent data is available from County Assessors, to annually collect and report to the Legislature data from County Assessors to quantify the amount of assessed value exempted and the number and type of taxpayers granted this exemption.

6. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because SB 23 expands the disabled veterans’ exemption, Legislative Counsel says that this bill imposes a new state mandate. The measure provides that the state shall not reimburse local agencies for property tax revenue losses, instead stating that should the Commission on State Mandates determine that the bill imposes a reimbursable mandate, reimbursement must be made pursuant to existing statutory provisions.

7. Coming and going. The Senate Rules Committee ordered a double referral of SB 23: first to the Revenue and Taxation Committee to consider its tax implications, and second to the Military and Veterans Affairs Committee.

Support and Opposition

(3/5/25)

Support: Councilmember Luis Uribe, City of Riverbank

American Legion, Department of California
AMVETS, Department of California
California Association of Realtors
California State Commanders Veterans Council

California Tribal Business Alliance
County of Monterey
Military Officers Association of America, California Council of Chapters

Five Individuals

Opposition: None submitted.

-- END --

SENATE COMMITTEE ON REVENUE AND TAXATION

Senator Jerry McNerney, Chair

2025 - 2026 Regular

Property taxation: exemption: disabled veteran homeowners

Enacts a full exemption from property tax for disabled veterans.

Background

The California Constitution provides that all property is taxable unless explicitly exempted by the Constitution or federal law. The Constitution limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, plus any locally-authorized bonded indebtedness. Assessors reappraise property whenever it is purchased, newly constructed, or when ownership changes.

The Constitution allows the Legislature to partially or wholly exempt from property tax the value of a disabled veteran’s principal place of residence if the veteran has lost two or more limbs, is totally blind, or is totally disabled as a result of a service-connected injury. The taxpayer must have served in the United States Army, Navy, Air Force, Space Force, Coast Guard, or Marine Corps and been discharged under conditions other than dishonorable. This disabled veterans’ exemption is available to disabled veteran taxpayers or their unmarried surviving spouses, so long as the surviving spouse receives a U.S. Department of Veterans Affairs (USDVA) determination that the spouse’s death was service-connected. The exemption applies instead of other real property exemptions, like the homeowners’ exemption.

Current law defines “totally disabled” to mean that either the USDVA or the military service from which the veteran was discharged has rated the disability at 100 percent, or has rated the disability compensation at 100 percent by reason of being unable to secure or follow a substantially gainful occupation. State law also contains specific definitions for blindness and the loss of two or more limbs.

State law implementing the exemption doesn’t fully exclude the value of a disabled veteran’s property, instead enacting a partial exemption of $100,000 for disabled veteran taxpayers with annual household income of more than $40,000, or $150,000 for income lower than that amount, with each threshold adjusted for inflation by the Department of Industrial Relations using the California Consumer Price Index for all items. The current inflation-adjusted value of the exemption for 2025 is $175,298 for disabled veterans with income above $78,718, and $262,950 for those with income below $78,718.

Seeking to provide additional benefits for disabled veterans, the author wants to increase the amount of the existing disabled veterans' exemption from a partial exemption where taxpayers can claim one of two amounts based on income to a full exemption.

Proposed Law

SB 23 enacts a full exemption from property tax for disabled veterans, using the same definitions that apply to the existing partial exemption. SB 23 additionally requires the claimant seeking the exemption to provide the County Assessor with documentation, including a letter from USDVA or the military service from which the veteran was discharged to demonstrate the veteran’s disability rating and establish eligibility for the exemption. SB 23’s full exemption applies to lien dates starting on January 1, 2025 and ending January 1, 2035.

State Revenue Impact

Pending.

Comments

1. Purpose of the bill. According to the author, “SB 23 will exempt the primary residences of veterans who have received a 100% disability rating from the Department of Veterans Affairs from property taxes in the state of California. Additionally, it will extend the same exemption to an unmarried surviving spouse, providing the same benefit to that the veteran would have been entitled to if alive, provided they meet the necessary conditions. Current California law offers a property tax exemption to 100% disabled veterans, but it does not adequately address the financial challenges faced by the veteran community, particularly with ongoing rise in the cost of living. SB 23 aims to alleviate these challenges and provide financial stability to veterans who struggle to secure sufficient income to afford median home prices.”

2. No income test. Generally, property tax exemption amounts do not depend on the taxpayer’s income. However, the current bifurcated disabled veterans’ income-based exemption amounts were enacted by the Legislature when it allowed a greater exemption ($15,000 at the time) for disabled veterans with income sufficiently low to qualify for the Property Tax Postponement program (AB 955, Mangers, 1978). The Legislature maintained the distinction when it fixed the current exemption amounts (SB 320, Royce, 1989) and later applied inflation adjustment (SB 1362, Poochigian, 2000). SB 23’s larger exemption does not incorporate this distinction, instead allowing a full exemption for all qualified disabled veterans. As a result, the bill could increase the benefit received by those disabled veterans who have sufficient income to meet current tax obligations despite their disability. However, the bill’s greater disabled veterans’ exemption reduces taxes for those who have sacrificed greatly for their country. Furthermore, the benefit would likely be easier for Assessors to administer because they would no longer have to verify the taxpayer’s income. The Committee may wish to consider whether the amount of the disabled veterans’ exemption should depend on the disabled veteran’s income.

3. Coming home. According to the Board of Equalization (BOE), disabled veteran taxpayers claimed almost $12 billion in exemptions in 2023-24. Across California, the counties of San Diego (17,778), Riverside (12,394), San Bernardino (5,897), Los Angeles (5,634), and Sacramento (4,133) have the most disabled veterans’ exemptions claimed in 2025. The number of exemptions has increased significantly recent years: in 2018, San Diego had only 6,490, Riverside only 4,895, Los Angeles 3,332, San Bernardino 2,817, and Sacramento 2,660.

4. Related legislation. Governor Newsom’s Proposed 2025-26 Budget proposes to exclude from income for state tax purposes: (1) retirement pay received by a taxpayer from the federal government for service in the uniformed services; and (2) annuity payments received by a qualified taxpayer pursuant to a Department of Defense Survivor Benefit Plan. The exemption would apply for up to $20,000 of military retirement income. Additionally, the exemption would be limited to taxpayers with up to $250,000 in income if filing jointly and up to $125,000 in income for single filers. The proposal is estimated to reduce revenues by $130 million in 2025-26 and by $85 million annually thereafter.

Additionally, the Committee will likely consider several measures adding or enhancing tax benefits for military veteran taxpayers:

• SB 1 (Seyarto) enacts the Military Services Retirement and Surviving Spouse Benefit Payment Act, which excludes two forms of military retirement income from state income tax. SB 1 is identical to the Governor’s Budget proposal. The Committee will also hear the measure at its 3/12/25 hearing.
• SB 56 (Seyarto) provides that service-connected disability benefits do not count toward income for the purposes of determining whether the higher or lower disabled veterans’ exemption amount applies. The Committee will also hear the measure at its 3/12/25 hearing.
• SB 296 (Archuleta) is substantively identical to this bill and is currently pending in the Senate Revenue & Taxation Committee.
• SCA 4 (Archuleta)/SB 623 (Archuleta) amends the California Constitution to allow additional property tax benefits for taxpayers eligible for the disabled veterans’ or veterans’ exemptions from property tax. SCA 4 is currently pending referral in the Senate Rules Committee.

5. Section 41. Section 41 of the Revenue and Taxation Code requires any bill enacting a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve and detailed performance indicators, along with data collection and reporting requirements (SB 1335, Leno, 2014). To comply with Section 41, SB 23:

• States that its goal, purpose, and objective is to reduce homelessness by providing a tax exemption to 100 percent disabled veteran homeowners.
• Directs BOE, to the extent data is available from County Assessors, to annually collect and report to the Legislature data from County Assessors to quantify the amount of assessed value exempted and the number and type of taxpayers granted this exemption.

6. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because SB 23 expands the disabled veterans’ exemption, Legislative Counsel says that this bill imposes a new state mandate. The measure provides that the state shall not reimburse local agencies for property tax revenue losses, instead stating that should the Commission on State Mandates determine that the bill imposes a reimbursable mandate, reimbursement must be made pursuant to existing statutory provisions.

7. Coming and going. The Senate Rules Committee ordered a double referral of SB 23: first to the Revenue and Taxation Committee to consider its tax implications, and second to the Military and Veterans Affairs Committee.

Support and Opposition

(3/5/25)

Support: Councilmember Luis Uribe, City of Riverbank

American Legion, Department of California
AMVETS, Department of California
California Association of Realtors
California State Commanders Veterans Council
County of Monterey
Military Officers Association of America, California Council of Chapters

Five Individuals

Opposition: None submitted.

-- END --