January 2025 Los Angeles Wildfires Impact on Local Property Tax Revenues

Los Angeles Wildfires Burned Thousands of Structures in Rural and Urban Areas. In January 2025, two large fires in Los Angeles County burned over 37,000 acres including structures in both rural and urbanized areas. For more information on the state’s response to prior wildfires, see the LAO CA Wildfire FAQ. This post examines the likely impact of these fires on property tax collections.

Fire Damage Lowers Property Tax Assessments. State statute allows for a reduction in a property’s assessed value when the property is damaged due to disasters. Assessed value is the basis of a property owner’s tax bill and is set based on the original purchase price, meaning it typically is lower than the property’s current market value. When properties sustain at least $10,000 in damage, county assessors estimate a percentage reduction in market value based on the extent of the damage. They then set a new assessed value which is equal to the previous assessed value multiplied by the estimated percentage reduction. For example, consider a property with a market value of $1 million and assessed value of $800,000 prior to the fires. If fire damage reduced the property’s estimated market value by 50% (from $1 million to $500,000), the county assessor will reduce the property’s assessed value by 50% to $400,000. County assessor offices conduct these reassessments through a combination of automated reassessments and requests from property owners and update them annually.

Assessed Values Likely Lowered by At Least $10 billion. There are more than 19,000 parcels with about $28 billion in assessed value—including over $19 billion in land value and $9 billion in improvement values—within the fire perimeters. The fires destroyed most structures within the fire perimeters but damaged properties retain some land value. Using Los Angeles County assessor data and damage reports from CalFire, we estimate the fires caused a reduction of $10 billion to $20 billion in assessed values. The precise impact on property assessments will become clearer as reassessment are made.

Property Tax Revenues Reduced. This reduction in assessed values will correspondingly reduce property tax payments by $100 million to $200 million in 2025-26. These property tax revenues would have gone to the County and City of Los Angeles and the cities of Pasadena and Sierra Madre, as well as a number of local school districts and special districts. We expect assessed values to recover over time as debris are removed and homes are rebuilt. Full recovery could take several years.

Executive Orders May Delay Property Tax Collections. The Governor’s January 16 executive order (and February 4 amendments) grants additional property tax relief to thousands of property owners in fire-affected and surrounding areas. The Governor’s executive order–which applies to properties in 18 Los Angeles area zip codes–allows property owners to delay all property tax payments until April 10, 2026 without penalty. We estimate that this executive order affects 218,000 parcels with over $200 billion in assessed value.