California Lawmakers Propose Sweeping Tax Increases for 2026

New taxes target businesses, landlords, and consumers as state faces budget deficit

Published on Feb. 13, 2026

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Lawmakers and local officials in California are planning a wave of new taxes for 2026 that would hit businesses, landlords, and consumers across the state. Proposals include a "billionaire's tax", higher sales taxes, and changes to corporate taxes that would subject companies' global income to California law. The tax push comes as the state faces a budget deficit, but critics argue the new taxes are not justified by improved public services.

Why it matters

The proposed tax increases would significantly impact California's economy, potentially driving out businesses, jobs, and investment. While lawmakers argue the new taxes are needed to address budget shortfalls, critics say the state's tax burden is already too high and the new measures lack accountability for how the additional revenue will be spent.

The details

The tax proposals include a controversial "billionaire's tax" that has already led to an estimated $1 trillion in wealth fleeing the state. Local governments are also seeking to raise sales taxes, with Los Angeles County voting to increase the sales tax by another half-cent. Other measures target landlords with vacant properties and seek to impose new taxes and penalties on businesses based on workforce metrics like employee reliance on government health coverage.

  • The new gas tax increases are set to take effect in July 2026.
  • Lawmakers in Sacramento and San Francisco are currently crafting the new tax proposals for 2026.

The players

Gavin Newsom

The Governor of California who has faced budget deficits during his tenure.

Jared Walczak

A senior fellow at the Tax Foundation who has analyzed California's high tax burden.

Dave Kline

A spokesperson for the California Taxpayers Association who has commented on the proliferation of targeted tax proposals.

Jon Coupal

The president of the Howard Jarvis Taxpayers Association who has expressed skepticism about the state and local government's use of tax revenue.

Kathryn Barger

The lone dissenting vote on the Los Angeles County Board of Supervisors regarding a proposed sales tax increase.

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What they’re saying

“The overall picture is one of high taxation and taxes that don't exist in other states.”

— Jared Walczak, Senior Fellow, Tax Foundation (usa-times.news)

“It's not just proposals to increase the sales tax or income tax on everyone – it's very targeted these days.”

— Dave Kline, Spokesperson, California Taxpayers Association (usa-times.news)

“Any skepticism voters have in regards to state and local government is justified.”

— Jon Coupal, President, Howard Jarvis Taxpayers Association (usa-times.news)

“We are not, as a whole, credible when it comes to promises made, promises broken.”

— Kathryn Barger, Los Angeles County Supervisor (Los Angeles Times)

What’s next

The California legislature is expected to continue debating and refining the various tax proposals in the coming months, with the goal of passing new measures before the 2026 fiscal year.

The takeaway

California's already high tax burden is set to increase further in 2026, with a range of new taxes targeting businesses, landlords, and consumers. While lawmakers argue the new revenue is needed to address budget deficits, critics warn the tax hikes could drive out investment and jobs, further damaging the state's economy.