California tax and fee hikes add $14.3 billion to state budget
A California Tax Foundation report finds that measures approved in the recent legislative session will raise state and local revenues by about $14.3 billion each year.
Research by the California Tax Foundation shows that tax and fee legislation passed during the 2025-26 session will add an estimated $14.3 billion per year to California's state and local coffers. Out of 156 proposals, 67 were approved and signed into law by Governor Gavin Newsom, representing a small fraction of the more than $803 billion in proposals considered. The two biggest components are Senate Bill 122, which extends sales tax to digital prewritten software and limits business tax credits, projected to bring in at least $9.17 billion annually, and Senate Bill 125, a health-plan tax expected to generate $2.3 billion each year.
Together they comprise roughly $11.47 billion, or about 80% of the total increase. While the overall rise could translate to about $1,000 extra per household, most of the new revenue is aimed at particular taxpayers and corporations. Assemblymember Robert Garcia and Senator Lena Gonzalez were the top supporters of higher taxes in the Assembly and Senate, respectively.
Why it matters
The added taxes will raise living costs for Californians and shape the state's fiscal outlook as Governor Newsom eyes a national campaign.
How the sides frame it
LOW AGREEMENTCenter coverage emphasizes Governor Newsom's fiscal missteps, overspending and fraud, while right-leaning coverage highlights new tax and fee measures that will generate $14.3 billion for the state.
CENTER
Centrist coverage frames the story as a record of budgetary mismanagement and fraud under Governor Newsom.
RIGHT
Right-leaning coverage frames the story as a revenue-raising success from newly enacted taxes and fees.
The right emphasises
- tax and fee legislation will add an estimated $14.3 billion per year
- Senate Bill 122 extends sales tax to digital software, projected to bring in $9.17 billion annually
- Senate Bill 125 imposes a health-plan tax expected to generate $2.3 billion each year
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