Property owners in California would face a property tax increase of more than 7 percent this year if not for the cap set by Proposition 13, according to information released December 23 by the State Board of Equalization.
Data from the Department of Industrial Relations shows that the California Consumer Price Index increased 7.27 percent from October 2021 to October 2022, the BOE stated in a letter to assessors.
Under Proposition 13, assessed values must be adjusted for inflation every year, but increases cannot exceed 2 percent. While this still represents a large dollar amount given California’s high property values, it makes property taxes stable and predictable for owners, as well as small business renters and others whose leases make them responsible for any property tax increases.
The cap also stabilizes local government budgets by making it possible for local governments to accurately project the amount of revenue they will receive from property taxes.
The cap is on the inflation factor only. Property taxes can increase more than 2 percent when a property is reassessed due to a change in ownership or new construction, or when a property regains value after being taxed at a reduced amount while in decline-in-value status.