Two California laws signed in September 2026 change property taxes for two groups of South Bay homeowners from 2027. Senate Bill 296 replaces the disabled veterans’ exemption, for lien dates from January 1, 2027 through 2031, with an exemption of 50 percent of the first $1,000,000 of a qualifying veteran’s home value, and 100 percent of that first $1,000,000 for a household with income of $83,474 or less. On a South Bay home with a taxable value of $1.2 million, that takes $500,000 off the taxable value, about $5,000 a year at the 1 percent general levy, against about $1,800 under the 2026 basic exemption. Senate Bill 974 adds a court-established special needs trust to the ways a parent’s home can pass to a child and keep the parent’s taxable value under Proposition 19, starting January 1, 2027.
Chhabria Real Estate Company has sold thousands of homes on the Palos Verdes Peninsula, the Beach Cities and the Greater South Bay since 1984.
What does Senate Bill 296 change for a disabled veteran who owns a home?
Senate Bill 296, by Senator Bob Archuleta, is Chapter 727 of 2026, approved by the Governor on September 28, 2026. It adds Section 205.5.1 to the Revenue and Taxation Code. The act took effect when it was signed, and the new exemption applies to property tax lien dates on or after January 1, 2027 and before January 1, 2032. The lien date is January 1 each year, so the first tax bill it reaches is the 2027 to 2028 bill.
It applies to a principal residence owned by a veteran, the veteran’s spouse, or both jointly, where the veteran is blind in both eyes, has lost the use of two or more limbs, or is totally disabled, in each case from an injury or disease incurred in military service. The new exemption takes the place of the existing disabled veterans’ exemption in Section 205.5:
- Basic: 50 percent of the part of the home’s full value that does not exceed $1,000,000 is exempt.
- Household income of $83,474 or less: 100 percent of the part of the home’s full value that does not exceed $1,000,000 is exempt.
- Both the $1,000,000 and the $83,474 are adjusted for each assessment year under Section 205.5.
- A home with a full value of $371,778 or less, owned by a veteran whose household income is above $83,474, stays on the existing Section 205.5 exemption instead.
An unmarried surviving spouse who owns and lives in the home receives the same amount the veteran would have, where the veteran qualified during their lifetime or died from a service-connected injury or disease, and was a California resident on January 1 of the year of death. A veteran confined to a hospital or care facility keeps the home as a principal residence as long as it is not rented to a third party; a family member living there is not a third party.
What does that look like on a South Bay tax bill?
The general levy is 1 percent of taxable value, before voter-approved bonds and special assessments. For a South Bay owner who qualifies:
- Taxable value of $1.2 million, basic: $500,000 exempt under Senate Bill 296, about $5,000 a year. The 2026 basic exemption is $180,671, about $1,800 a year.
- Taxable value of $1.2 million, household income of $83,474 or less: $1,000,000 exempt, about $10,000 a year. The 2026 low-income exemption is $271,009, about $2,700 a year.
- Taxable value of $700,000, basic: $350,000 exempt, about $3,500 a year.
The 2026 figures are from the State Board of Equalization’s Letter to Assessors 2025/014. The 2027 adjusted figures had not been published when this post was written. Taxable value is the assessed value on the county roll, which for a home owned since before recent price gains is often well below what it would sell for today.
The Los Angeles County Assessor handles the claim. An owner already receiving the disabled veterans’ exemption may want to ask the Assessor whether a new claim is needed for the 2027 lien date. More on the current exemption and the Veterans Day benefits for South Bay owners is in our Veterans Day post.
What does Senate Bill 974 change for an inherited home?
Senate Bill 974, by Senator Kelly Seyarto, is Chapter 665 of 2026, approved by the Governor on September 27, 2026, and takes effect January 1, 2027. It amends Revenue and Taxation Code Section 63.2, the statute that carries out the parent-to-child and grandparent-to-grandchild exclusion voters approved as Proposition 19 in November 2020.
Under that exclusion, a parent’s principal residence can pass to a child without a full reassessment when the child makes it their principal residence within one year and files for the homeowners’ or disabled veterans’ exemption within one year. A transfer through a trust already counted. Senate Bill 974 adds one sentence: a special needs trust established under Section 3604 of the Probate Code, which a court sets up for a minor or a person with a disability that substantially impairs their ability to provide for their own care, is an eligible medium of transfer. Before the bill, that kind of trust was not named.
The rest of the exclusion is unchanged. The claim is filed within three years of the transfer, or before the home is sold to a third party or the child stops living there, whichever comes first.
How much of a parent’s taxable value carries over under Proposition 19?
The exclusion keeps the parent’s taxable value only up to a limit. If the home’s market value at transfer is less than the parent’s taxable value plus $1,000,000, the parent’s taxable value carries over. If it is more, the difference above that line is added to the parent’s taxable value. The $1,000,000 is adjusted for inflation every two years.
A South Bay example using the statute’s $1,000,000: a parent’s home carries a taxable value of $400,000 and is worth $2.5 million at transfer. The line is $1.4 million, so $1.1 million is added, and the child’s new taxable value is $1.5 million. At the 1 percent general levy, that is about $15,000 a year instead of the parent’s $4,000, and about $10,000 a year less than a full reassessment at $2.5 million.
Is either law tied to a ballot measure?
Senate Bill 974 works inside two voter-approved measures. The 1 percent limit and the 2 percent annual cap on assessed value come from Article XIII A of the California Constitution, added by Proposition 13 in 1978. The parent-to-child exclusion is Section 2.1 of that article, added by Proposition 19 in November 2020. Senate Bill 974 changes the statute that carries out Section 2.1, by majority vote, and does not change the Constitution.
Senate Bill 296 rests on the existing veterans’ exemption authority in the Constitution and on Section 205.5 of the Revenue and Taxation Code. It passed by majority vote, and it expires after the 2031 lien date unless the Legislature extends it.
This post is part of our series on the California laws that take effect in 2027. The full list is in what changes for South Bay homeowners, buyers and landlords in 2027.
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Sources
- Senate Bill 296, Chapter 727, Statutes of 2026, California Legislative Information, read November 13, 2026.
- Senate Bill 974, Chapter 665, Statutes of 2026, California Legislative Information, read November 13, 2026.
- State Board of Equalization, Letter to Assessors 2025/014, 2026 disabled veterans’ exemption amounts.
- State Board of Equalization, Disabled Veterans’ Exemption.
We do our very best to supply facts drawn from official sources so that the information you find here is reliable and accurate. If we find conflicting information, we report on all of it.
This post is general information about two California statutes. It is not real estate, tax, legal, lending, financial or investment advice, and not a recommendation to buy, sell, hold, list or price any property. Eligibility and the amount of any exemption or exclusion depend on each owner’s facts and are decided by the Los Angeles County Assessor; consult a tax advisor or the Assessor. Neil Chhabria, Broker, DRE 01821437. Equal Housing Opportunity.
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