Palomino is caused by the horse having the genes ee CcrC, ie possessing one copy of the cream gene on a chestnut base.
Ideally, a palomino should be the color of a gold coin, with the main and tail having at most 15% non-white hairs.

Breeding two palominos does not always equal palomino. You might get a chestnut [15%](ee CC), palomino [50%](ee CcrC) or Cremello (ee CcrCcr)
An waterproof method of getting a palomino is crossing a chestnut and a Cremello together, since ee CC + ee CcrCcr = ee CcrC.

From Wikipedia:

Colors that are not true Palomino

Many non-palominos have a gold coat or a light mane, or both. Horses that have a gold body but a black mane and tail are Buckskins. Those that have a dull gold or tan body with a dark mane and tail plus "primitive" dark markings such as a dorsal stripe down the spine and zebra markings on the back of the forearms are called duns. Horses with a chocolate-colored coat with a light mane and tail may actually be black horses expressing the rare silver dapple gene. Many reddish-colored "palominos" with a light cream mane and tail are chestnut horses that carry a flaxen gene. The Champagne gene also causes a golden-colored coat on some horses, but the presence of pink skin, amber or hazel eyes in adulthood, and mottled skin suggest the presence of the champagne gene, not the cream gene. The pearl gene or "Barlink factor," may also create blue-eyed palominos.

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