California’s Inheritance Tax Break Is Helping Some Much More Than Others

An inheritance tax benefit, along with Proposition 13, has resulted in lower tax rates passing down through generations and billions of dollars in lost tax revenue.

2 minute read

August 30, 2018, 8:00 AM PDT

By Camille Fink


Southern California Coast

Creative Family / Shutterstock

For long-term homeowners, Proposition 13 has kept property taxes low and tied to property values from the 1970s. Liam Dillon and Ben Poston report on a Los Angeles Times analysis of the effects of an inheritance tax break passed in 1986, eight years after Proposition 13. For over 30 years, Proposition 58 has allowed parents to pass on these tax benefits to their children, generation after generation.

The study of 13 coastal communities found that these inherited houses are located in areas with higher property values. In addition, many of the properties in vacation spots and wealthier parts of Los Angeles County are rentals or used as second homes. The consequences, say Dillon and Poston, have been twofold:

The inheritance tax break, The Times has found, has allowed hundreds of thousands — including celebrities, politicians, out-of-state professionals and some of California’s most prominent families — to avoid paying the higher taxes owed by newer homeowners. The tax break has deprived school districts, cities and counties of billions of dollars in revenue.

Policymakers and advocates acknowledge the inheritance tax break was enacted in the state’s anti-tax political environment of the 1970s and its unanticipated effects are creating a tiered system. However, the robust support for Proposition 13 and failed past attempts to change it mean any reform efforts around the inheritance tax break face an uphill battle.

Friday, August 17, 2018 in Los Angeles Times

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Close-up of "Apartment for rent" sign in red text on black background in front of blurred building

Trump Administration Could Effectively End Housing Voucher Program

Federal officials are eyeing major cuts to the Section 8 program that helps millions of low-income households pay rent.

April 21, 2025 - Housing Wire

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 23, 2025 - Diana Ionescu

Ken Jennings stands in front of Snohomish County Community Transit bus.

Ken Jennings Launches Transit Web Series

The Jeopardy champ wants you to ride public transit.

April 20, 2025 - Streetsblog USA

Yellow electric school bus with preteen students exiting.

California Invests Additional $5M in Electric School Buses

The state wants to electrify all of its school bus fleets by 2035.

April 25 - Associated Press

City Hall building in Austin, Texas.

Austin Launches $2M Homelessness Prevention Fund

A new grant program from the city’s Homeless Strategy Office will fund rental assistance and supportive services.

April 25 - Spectrum Local News

Brick school building with mid-sized tree on front lawn.

Alabama School Forestry Initiative Brings Trees to Schoolyards

Trees can improve physical and mental health for students and commnity members.

April 25 - Governing