Property Taxes Property taxes in California are levied and administered by county government. The State Board of Equalization performs an oversight role relative to the county assessors' activities. The County Tax Collector bills and collects tax, and the County Auditor distributes the revenue to the various public agencies sharing the revenue. The tax rate is 1 percent plus a component representing voter-approved bonded indebtedness for the district in which the property is located on the lien date. Thanks to Proposition 13, real property is assessed at market value, then increased a maximum of 2 percent per year when the rate of inflation for the year is 2 percent or higher.
Property is reassessed in the event of new construction or when ownership changes.
Manufacturing equipment is subject to local property taxes. It is assessed as personal property or as real property in the classification of fixtures. Non-manufacturing equipment and pollution control equipment are subject to local property taxes. The equipment is assessed each year at market value, and depending on the manner affixed and other factors, equipment is classified as either real or personal property. Raw materials, work in process, and finished goods, which will be held for sale or lease in the ordinary course of business are exempt from property tax under the definition of inventory.