California Tax Hikes Total $14.3 Billion Under Newsom, Report Says
New taxes and fees approved during the last two-year legislative session will increase state and local government revenue by billions annually, according to the California Tax Foundation.
Gov. Gavin Newsom and Democratic lawmakers in California have approved measures during the past two-year legislative session that will increase taxes and fees by an estimated $14.3 billion annually, a new report from the California Tax Foundation indicates.
These increases add to the financial burdens already faced by Californians, who already contend with some of the nation's highest gasoline taxes, the highest statewide base sales tax rate, and the highest top personal income tax rate.
"When the new taxes and fees approved this session are fully implemented, Californians will be paying $14.3 billion more to their state and local governments, on top of any additional taxes approved in the November election," said Caitlin Herring, research analyst for the California Tax Foundation. "These new expenses will increase the cost of living in this state just as a new governor takes office and begins grappling with California’s ongoing affordability problem."
While a broad calculation suggests the taxes could amount to an approximately $1,000 annual increase per household, the foundation noted that many of the new taxes target specific taxpayers and businesses.
The analysis identified 156 proposals to increase taxes or fees during the 2025-26 legislative session, with 67 of those measures passing the Legislature and being signed into law by Newsom. These enacted increases represent a fraction of the more than $803 billion in proposed tax and fee hikes that lawmakers considered.
Two significant measures, integrated into the state’s 2026-27 budget, account for the majority of the projected revenue increase. Senate Bill 122 extends taxation to sales of digital prewritten software, including Software-as-a-Service (SaaS), and limits businesses' use of tax credits, together projected to generate at least $9.17 billion annually. Senate Bill 125 imposes a health plan tax estimated at $2.3 billion annually. Combined, these two bills are expected to contribute approximately $11.47 billion to the annual increases.
Newsom's office did not immediately respond to a request for comment.
Separately, the California Medical Association and the California Association of Health Plans have stated that a new state healthcare tax, anticipated to increase family premiums by hundreds of dollars annually, violates Proposition 35, a 2024 voter-approved measure limiting such taxes.