Property taxes in Palo Alto: Prop 13, Prop 19 and the extras

Property tax in Palo Alto is a story of two numbers: what a house is worth and what it is assessed at. Because of Proposition 13, those numbers can be millions of dollars apart. A family that bought in the 1980s may pay a few thousand dollars a year while a new neighbor in a similar house pays tens of thousands. Knowing why and what changes the number matters for buyers, sellers and anyone inheriting a home.

Our property taxes and city fees guide covers the basics: which county office does what, due dates, penalties, exemptions and appeals. This page goes deeper into how the assessed value is set and how it can change. It is general information, not tax or legal advice. Confirm details with the Santa Clara County Assessor and talk to a licensed tax professional about your own case.

How Proposition 13 sets your base

Voters approved Proposition 13 in 1978. It does three things that shape every Palo Alto bill.

1. It caps the general levy at 1 percent of assessed value.
2. It sets a base year value. When you buy, the assessed value is usually reset to the purchase price.
3. It limits growth. After that, the assessed value can rise each year by no more than 2 percent or the change in the California Consumer Price Index, whichever is lower.

The compounding is slow. A home bought for $3,000,000 and increased by the full 2 percent every year would be assessed at about $3.66 million after ten years. In a market where prices have risen faster than that, the gap between assessed and market value grows with every year of ownership.

What resets the value and what does not

• A change in ownership, such as a sale, resets the base to market value.
• New construction adds value for the new part only. An addition or a new accessory dwelling unit is assessed at its own value and added to the existing base. The rest of the house keeps its old base. Our ADU guide covers those projects.
• Transfers between spouses and transfers into your own revocable trust generally do not trigger reassessment.
• Repairs and maintenance, such as a new roof replacing an old one, normally do not count as new construction.

If market value ever drops below your assessed value, the Assessor can temporarily lower it under what is often called Proposition 8. The city fees guide lists the deadline for asking.

Proposition 19: family transfers and moving

Proposition 19, approved in November 2020, made two big changes that matter in a high-value city like Palo Alto.

Parents to children

Before 2021, parents could pass a home and other property to their children without reassessment. Now, for transfers on or after February 16, 2021, the exclusion applies only to a family home or family farm. The child must make the home their principal residence and file for the homeowners' or disabled veterans' exemption within one year. The exclusion is capped. According to the State Board of Equalization, for transfers from February 16, 2025 through February 15, 2027 the cap is the home's factored base year value plus $1,044,586. Value above that is added to the assessment. The board adjusts the amount every other year. Grandparents can use the exclusion for a grandchild only if the grandchild's parents have died.

In Palo Alto, where a house bought decades ago may be worth many times its assessed value, a child who does not move in can face a tax bill many times larger than the parent paid. Families often plan years ahead with an estate attorney.

Owners 55 and older

Proposition 19 also widened the base year transfer. Homeowners 55 or older, severely disabled owners and victims of wildfire or other disasters can move their taxable value to a replacement principal residence anywhere in California. They can do this up to three times. The replacement must be bought or built within two years of selling the original. If it costs more than the home sold, the difference is added to the transferred value. That can make it easier for longtime Palo Alto owners to downsize. Our selling guide covers the rest of that process.

Supplemental bills, with an example

The regular bill is based on the value as of January 1. When a property changes hands, the county issues a supplemental bill for the rest of the fiscal year, which runs July 1 to June 30. Here is a simplified example.

A purchase between January 1 and May 31 usually produces two supplemental bills, one for the current fiscal year and one for the next, because the January 1 roll was already set before the sale. Supplemental bills do not go to lenders, even when an escrow account pays regular taxes. Budget for them. Our buying guide lists other first-year costs.

Bonds and parcel taxes on a Palo Alto bill

Everything above 1 percent comes from voters. Two kinds of charges appear.

• General obligation bonds are added as a percentage of assessed value. Bonds for schools, the community college district and other agencies are repaid this way. The combined bond rate changes slightly every year.
• Parcel taxes and direct charges are flat amounts per parcel or based on use, not value. Each line names the agency that charges it. Valley Water, the county water district, also has a special tax for its Safe, Clean Water program.

The exact rate depends on the tax rate area the parcel sits in. The county shows the breakdown on each bill and on its online property tax lookup.

The school parcel tax

Palo Alto Unified has relied on a parcel tax since 2001. Voters renewed it in 2005, 2010, 2015 and 2020. The district's parcel tax renewal page lists the current rate at $941 a parcel and says the funding is set to expire in 2027 unless renewed. Homeowners 65 and older can apply for an exemption, as can low-income homeowners with disabilities who receive federal SSI or SSDI benefits. Those already exempt do not need to reapply.

In 2026 the board asked voters to renew the tax at a lower $800 for four years with no inflation increases. That measure, Measure B, was on the June 2, 2026 ballot. Parcel taxes need a two-thirds vote. Final results compiled by California City Finance show 62.4 percent yes, short of the threshold, so Measure B failed. The current $941 tax still expires in 2027. Check the district's site for any new measure. School funding questions often come back to the ballot, which our voting guide explains. For the schools themselves, see our public schools guide.

Due dates in brief

Santa Clara County bills come in two installments. The first is due November 1 and becomes late after 5 p.m. on December 10. The second is due February 1 and becomes late after 5 p.m. on April 10. Late payments get a 10 percent penalty plus a $20 cost. The county's property tax FAQ has the details.

Frequently asked questions