California's Insanely Tall Layer Cake of Taxes

From income tax to gas tax, Californians face a growing burden of state and local levies.

Published on Feb. 27, 2026

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California is known for its high taxes, with residents facing a complex web of state income tax, property tax, sales tax, and gas tax. The state's top income tax rate can reach as high as 14.4%, while local sales taxes often exceed 10%. New taxes, such as a proposed 'billionaire tax' and a per-mile driving tax, are also being considered. Despite the high tax burden, the state continues to struggle with issues like education, traffic, and climate change. This article examines the various layers of taxation in California and the challenges the state faces in balancing its budget and addressing its pressing problems.

Why it matters

California's high tax burden has significant implications for residents, businesses, and the state's overall economic and social well-being. The complex and ever-increasing tax structure raises the cost of living, making it difficult for many Californians to afford basic necessities. It also creates challenges for businesses, potentially driving them to relocate to other states with more favorable tax environments. Additionally, the persistent budget issues suggest that the current tax system may not be effectively addressing the state's pressing problems, raising questions about the effectiveness and fairness of the tax policies.

The details

California's tax burden starts with a high state income tax, with a top rate of 12.3% plus a 1% 'millionaire tax' surcharge and a payroll tax with no wage cap. This can push the top rate to 14.4%. Property taxes are also a significant burden, with Proposition 13 only partially restraining the rate of increase. Renters and consumers also pay property taxes through higher rents and prices. The state also has high sales taxes, with some cities exceeding 11%. Local tax increases often require voter approval, but cities and counties have found ways to circumvent this, such as by classifying taxes as 'general' rather than 'special purpose.' Additionally, the state has high gas taxes, with drivers paying 61.2 cents per gallon of gasoline and 46.6 cents per gallon of diesel fuel. The state is also considering a new tax on electric vehicle drivers and a per-mile driving tax.

  • In 2017, Governor Jerry Brown pushed legislation to raise the gasoline excise tax by 12 cents per gallon, the diesel fuel excise tax by 20 cents per gallon, and the diesel sales tax from 5.75% to 9.75%.
  • A 'citizens initiative' is currently circulating in the Bay Area that would add another 1% to the sales tax in San Francisco and 0.5% to the tax rate in four neighboring counties for transit.
  • The firefighters union in the city of Los Angeles is collecting signatures for another 0.5% increase in LA's sales tax, a year after the Palisades Fire.

The players

Jerry Brown

The former Governor of California who pushed legislation in 2017 to raise various fuel taxes.

Howard Jarvis Taxpayers Association

An organization that defends Proposition 13 and is working to repeal or restrict local transfer taxes in California.

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What they’re saying

“Higher taxes, Californians are told, will improve education, reduce traffic, and even fight climate change. But they never do.”

— Joel Pollak, Author (nypost.com)

What’s next

A new referendum to repeal or restrict local transfer taxes is headed for the November statewide ballot, thanks to the Howard Jarvis Taxpayers Association.

The takeaway

California's complex and ever-increasing tax burden has significant implications for residents, businesses, and the state's overall economic and social well-being. The persistent budget issues and the inability of the current tax system to effectively address the state's pressing problems raise questions about the effectiveness and fairness of the state's tax policies.