Gavin Newsom saddled Californians with $14B in new taxes in final years as governor: report

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Gov. Gavin Newsom loves to rattle off statistics — but he may not like a whopping new figure being tagged to him and California Democrats ahead of his likely presidential campaign.

Democratic lawmakers and Newsom have approved measures during the last two-year legislative session that will raise taxes and fees by an estimated $14.3 billion annually, according to a new California Tax Foundation report.

The increases come as Californians already pay the nation’s highest gasoline taxes, highest statewide base sales tax rate and 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,” California Tax Foundation research analyst Caitlin Herring said in a statement. 

“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.”

A back-of-the-envelope calculation would suggest the taxes would be a roughly $1,000 annual increase per California household, but the tax foundation cautioned that most of the taxes target specific taxpayers and businesses.

The foundation’s analysis identified 156 proposals to increase taxes or fees during the 2025-26 session. Of those, 67 passed the Legislature and were signed into law by Newsom. The approved increases represent a fraction of the more than $803 billion in proposals lawmakers considered, according to the report. 

Newsom’s office did not immediately respond to a request for comment.

Earlier this month, the California Medical Association and the California Association of Health Plans said a new state health care tax — expected to raise family premiums by hundreds of dollars annually — violates Proposition 35, a 2024 measure approved by 68% of voters that set limits on such taxes.

The two largest increases came from proposals Newsom incorporated into the state’s 2026-27 budget, according to the foundation.

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One measure, Senate Bill 122, extends taxation to sales of digital prewritten software regardless of how customers receive it. That includes Software-as-a-Service (SaaS), where the customer accesses the software hosted by the vendor but never takes possession of it.

The same legislation limits businesses’ use of tax credits, increasing the amount employers owe. Together, the changes are projected to generate at least $9.17 billion annually, according to the report.

A second budget measure, Senate Bill 125, imposes a health plan tax that the foundation estimates at $2.3 billion annually.

Combined, those two measures account for about $11.47 billion, or roughly 80% of the annual increases identified in the report.

The foundation also tracked how much individual legislators supported higher taxes and fees through their votes.

Assemblymember Robert Garcia (D-San Bernardino) backed measures totaling $795 billion, the highest amount in the Assembly, while Sen. Lena Gonzalez (D-Long Beach) led the upper chamber at $790 billion, according to the analysis.