California Disabled Veterans' Property Tax Exemption

Revenue and Taxation Code section 205.5 exempts part of the assessed value of a disabled veteran's principal place of residence. There are two amounts. The basic exemption has no income test and is claimed once. The low-income exemption is larger, carries a household income limit, and has to be claimed every year. Section 205.5 compounds both amounts and the income limit annually by an inflation factor drawn from the California Consumer Price Index. Board of Equalization letter to county assessors 2026/019, dated May 22, 2026, prints the figures. For the January 1, 2026 lien date the basic exemption is $180,671, the low-income exemption is $271,009, and the household income limit is $81,131, after that year's factor of 1.03065. To those figures the letter applies a factor of 1.02888, a 2.888% increase from a California Consumer Price Index of 348.871 in February 2025 to 358.946 in February 2026, and announces the January 1, 2027 figures: $185,889 basic, $278,836 low income, and an $83,474 income limit. Updated claim forms reach assessors for that 2027 lien date. The statute's disabled-veteran test is any one of these: blind in both eyes, lost the use of two or more limbs, or totally disabled as a result of injury or disease incurred in military service. Totally disabled means VA has rated the disability at 100%, or has rated compensation at 100% by reason of being unable to secure or follow a substantially gainful occupation. The Board states the blindness test as visual acuity of 5/200 or less. Service has to have been in time of war, or in time of peace in a campaign or expedition for which Congress issued a medal, or in time of peace with release from active duty because of a service-connected disability. The rating filter follows the 100% path and the unemployability path. Blindness and loss of the use of two or more limbs are not rating tests. The property has to be the veteran's principal place of residence. Section 205.5 keeps that true while the veteran is hospitalized, as long as the residence is not rented or leased to a third party. An unmarried surviving spouse can claim the exemption when the veteran qualified, would have qualified, or died from a service-connected disease. Remarriage ends eligibility, and a later divorce or widowhood can restore it. File form BOE-261-G with the county assessor. An initial claim filed within 90 days of the qualifying event, or by the following January 1, whichever is later, gets 100% of the exemption. A low-income claim filed January 1 through February 15 gets 100%, February 16 through December 10 gets 90%, and one filed after December 10 gets 85%. This is a partial exemption, not a full one. Assessed value above the exemption stays on the tax bill. A property carries only one of these exemptions, so a claimant who also qualifies for the $7,000 homeowners' exemption or the $4,000 veterans' exemption has to pick one. This one is the largest of the three. From the 2027 lien date. Senate Bill 296 (Chapter 727 of 2026), signed and filed September 28, 2026 and in effect immediately as a tax levy, adds Revenue and Taxation Code section 205.5.1 for lien dates from January 1, 2027 through January 1, 2031; the section repeals itself on January 1, 2032. In place of the section 205.5 amounts it exempts 50 percent of the part of the home's full value that does not exceed $1,000,000, and 100 percent of that part where household income does not exceed $83,474. Both figures are indexed as section 205.5 indexes its own. A home worth no more than $371,778 whose owner is over the income limit stays on the section 205.5 basic exemption, which is larger there. The disability tests are the same: blind in both eyes, loss of the use of two or more limbs, or totally disabled, meaning rated 100 percent or compensated at 100 percent for unemployability. The definition of veteran is new for this section. It needs a discharge under other than dishonorable conditions from the Army, Navy, Air Force, Marine Corps, Coast Guard or Space Force, the same wartime, campaign or disability-release service, and a VA determination that the veteran is eligible for VA health care. An unmarried surviving spouse gets the same amount, but only on the home that was the veteran's principal residence at death. The claim goes to the county assessor with the VA letter showing the rating. The State does not reimburse counties for the lost revenue (section 4 of the act).