Real property tax: Personal Income Tax Law: homeowners’ exemption: renter’s credit.
In addition to enhancing the homeowners exemption, SB 566 mandates an increase in renters' credits. For taxable years beginning on January 1, 2026, the bill will raise the average renters' credit from $120 to $550 for eligible couples and from $60 to $275 for other renters based on their income levels. This tied adjustment to property tax exemptions ensures that when property taxes decrease for homeowners, renters are also afforded comparable financial relief, striving towards equitable tax treatment across demographics.
Senate Bill 566, introduced by Senator Grove, aims to amend Sections 218 and 17053.5 of the Revenue and Taxation Code in California, with the objective of significantly increasing property tax exemptions for homeowners as well as enhancing renters' tax credits. Specifically, the bill proposes increasing the homeowners exemption from $7,000 to $50,000 for certain eligible homeowners, starting from the lien date for the fiscal year 2026-2027. This move is intended to relieve financial pressure on homeowners, particularly benefiting senior citizens aged 62 and older, who make up a significant portion of the target demographic.
While the bill seeks to foster tax equity, there are notable points of contention surrounding its implementation. The bill's provision that the state will not reimburse local agencies for property tax revenues lost due to these exemptions has raised concerns among local governments regarding their budgetary impact. Opponents of this approach argue that without state compensation, local governments may face financial hardships, particularly in sustaining essential services that depend on property tax revenues. This has led to a debate over the balance of tax relief against maintaining the financial integrity of local government operations and services.