Most people assume a tiered tax works like income tax — each rate applying only to the slice of value inside its band. That assumption is correct for the City of Santa Cruz. It is wrong for San Jose, and being wrong about it is expensive in a very specific way.
How the San Jose stack is built
San Jose is a charter city. That matters: charter cities tax under their own charter authority, so the half-rate cap in Rev. & Tax. Code §11911(b) and the credit in §11911(c) do not apply. The city tax stacks on the county tax rather than being credited against it. The county’s own fee schedule lists them as two separate line items with no offset.
So a San Jose sale carries the county’s $1.10 per $1,000, the city’s $3.30 per $1,000, and then Measure E once the consideration exceeds $2,300,000.
The part that is not marginal
Measure E adds a rate that applies to the full consideration, not to the amount above the threshold:
| Consideration | Measure E rate | Applied to |
|---|---|---|
| $2,300,000 or less | none | — |
| Over $2,300,000 | 0.75% | the entire price |
| Over $5,000,000 | 1.0% | the entire price |
| Over $10,000,000 | 1.5% | the entire price |
Which produces cliffs. At exactly $2,300,000 you owe no Measure E at all. At $2,300,001 you owe 0.75% of the whole $2,300,001 — which is $17,250. One dollar of price, seventeen thousand dollars of tax.
The other two cliffs have the same shape. Crossing $5,000,000 costs an extra $12,500. Crossing $10,000,000 costs an extra $50,000.
If your San Jose home is likely to land within roughly $20,000 above a threshold, that is a pricing and negotiation question, not a tax question. It is one of the few situations where accepting slightly less money leaves the seller with more.
Mountain View’s cliff is four times larger
Mountain View has been two-tiered since December 20, 2024 under Measure G. At or below $6,000,000 the rate is $3.30 per $1,000. Above $6,000,000 it is $15.00 per $1,000 on the entire consideration.
At $6,000,000 the city tax is $19,800. At $6,000,001 it is $90,000. The cliff is $70,200.
Palo Alto, also a charter city, is simpler: a flat $3.30 per $1,000, no threshold.
Where this does not apply at all
Most cities in both counties levy no city transfer tax whatsoever — Capitola, Scotts Valley, Campbell, Cupertino, Gilroy, Los Altos, Los Gatos, Milpitas, Monte Sereno, Morgan Hill, Santa Clara, Saratoga and Sunnyvale among them. There the entire transfer tax is the county’s $1.10 per $1,000.
Watsonville and the City of Santa Cruz both levy a base tax, but at the credited rate under §11911(c), so the combined base in those cities is still $1.10 per $1,000. In the City of Santa Cruz, Measure C then sits on top — and Measure C, unlike Measure E, is marginal and is capped.
Why your title company’s sheet may not show this
Title companies publish county closing-cost sheets as a free service and revise them periodically. City transfer taxes change between revisions, and the editions circulating right now predate three changes in this market. That is not a criticism of the title companies. It is a reason to check the number against the city rather than the handout.
The net proceeds calculator has all three stacks built in, including both cliffs. If you are anywhere near a threshold, run it at your target price and then again one dollar higher.