The Mills Act: The Hidden Tax Break Many California Homeowners Have Never Heard Of

Imagine buying a century-old home with original windows, handcrafted woodwork, and a wraparound porch. You know you'll spend money maintaining it—but what if California offered a way to help pay for those repairs while preserving a piece of history? For thousands of homeowners, that's exactly what the Mills Act does.

Although it has existed for decades, the Mills Act remains one of California's best-kept financial secrets. The program rewards owners of qualifying historic properties with reduced property taxes in exchange for a commitment to maintain and preserve their homes. For many homeowners, the savings can amount to thousands of dollars each year.

A Different Way to Think About Property Taxes

Most Californians are familiar with Proposition 13, which limits annual increases in assessed property values. The Mills Act takes a different approach. Instead of basing taxes primarily on market value, qualifying historic properties are assessed using an income-based valuation method established under state law. Depending on the property's characteristics and local assessment, this often results in a substantially lower taxable value.

The result? Some homeowners see property tax reductions of 20 to 60 percent, with savings varying widely from one property to another.

Preservation Instead of Demolition

The Mills Act isn't simply a tax break—it's a preservation partnership. When homeowners enter the program, they sign a long-term agreement with their city or county to maintain the property's historic character. In return, the local government provides an ongoing tax incentive that helps offset the costs of owning and caring for an older building. It's a practical solution to a common problem.

Historic homes often require specialized materials, skilled craftspeople, and repairs that can cost considerably more than work on modern houses. Original wood windows may need restoration rather than replacement. Decorative trim must often be repaired instead of discarded. Brickwork, plaster, roofing, and foundations can all require historically appropriate techniques.

Without financial assistance, some owners might postpone repairs—or choose less historically appropriate renovations. The Mills Act encourages preservation by making responsible stewardship more affordable.

More Than Beautiful Victorian Homes

Many people picture colorful Victorian "Painted Ladies" when they think of historic preservation, but Mills Act properties come in many forms. Across California, the program includes Craftsman bungalows, Spanish Colonial Revival homes, Mid-Century Modern residences, Art Deco commercial buildings, farmhouses, schools, churches, and even historic industrial structures.

What they have in common isn't a particular architectural style—it's historical significance. A home might qualify because of its architecture, its connection to an important local event, or its association with a notable individual. In most cases, however, the property must first receive official historic designation before becoming eligible.

A Benefit That Can Outlast Ownership

One of the program's most attractive features is that the agreement generally stays with the property when it changes hands. That means buyers don't have to start from scratch. If they purchase a home already under a Mills Act contract, they typically inherit both the benefits and the responsibilities.

For buyers who appreciate historic architecture, that can make an older home more financially appealing than they might have expected.

It's Not for Everyone

The Mills Act does come with obligations. Owners agree to maintain the property's historic features and generally must obtain approval for alterations that could affect its historic character. Many jurisdictions also require periodic inspections or progress reports documenting preservation work.

The agreement typically operates as a rolling 10-year contract, automatically renewing each year unless either the owner or the local government initiates a formal non-renewal process. For homeowners seeking complete freedom to remodel without restrictions, the program may not be a good fit. But for those who value craftsmanship, history, and thoughtful restoration, the responsibilities often align with what they already intend to do.

Why Communities Support It

Historic preservation isn't only about nostalgia. Well-maintained historic neighborhoods often attract tourism, support local businesses, increase civic pride, and preserve architectural diversity that can't be recreated once it has disappeared. Every restored home represents skilled labor, local investment, and a commitment to preserving the character of a community.

From the government's perspective, the reduced tax revenue on one property may be offset by broader economic benefits that come from revitalized neighborhoods and continued private investment. In many ways, the Mills Act allows preservation to happen through partnership rather than public ownership.

An Opportunity Worth Exploring

Not every California city or county participates in the Mills Act, and those that do often have their own eligibility requirements and application procedures. Some even limit the number of new contracts they approve each year. In fact, Lodi does not currently have a Historic Preservation Ordinance that allows for Mills Act provisions.  However, it is currently in process and LPA is actively working with the City staff to get it to place where it can be approved by City Council.

Soon, Lodi homeowners living in qualifying historic properties may discover that the program offers one of the state's most meaningful—and least publicized—financial incentives.

In an era when housing costs continue to challenge homeowners across California, the Mills Act stands as a reminder that preserving the past can also make financial sense for the future.

Sometimes, protecting history isn't just good for the community. It can be good for your property tax bill, too.