Californians, companies paid almost $3 billion more in taxes

Audio By Carbonatix

(The Center Square) – Californians and publicly-traded companies in the Golden State paid $2.9 billion more in taxes this year, in large part due to a booming stock market.

That's according to Gov. Gavin Newsom's office, which noted revenues came in 14.9% higher than expected as of September. The office said the increase was driven in large part by nine California companies reaching corporate valuations of $1 billion or more, resulting in more corporate taxes paid to the state.

“The world’s best talent comes to California to take risks, raise capital, build companies, and create whole industries that didn’t exist a few years ago,” Newsom said in a press release. “As our economy continues to grow and our revenues show everyone what’s possible, we will keep betting on the future being built right here.”

Newsom’s office did not respond directly to The Center Square before publication time on Monday.

Corporate and personal income taxes came in much higher than state officials expected this year. Individual Californians paid $1.1 billion in personal income taxes in September, or 8.5% above predictions, while corporations paid $1.3 billion, 49.1% higher than expected. Californians’ personal income grew 4.5% over last year in the second quarter of 2026, 0.1% higher than the national rate. According to the October 2026 finance bulletin from the California Department of Finance, wages and salaries increased 5.2% year on year.

Much of the additional revenues will go toward K-12 and community college funding in California because of the 1988 measure Prop. 98, which the state’s voters approved and mandates that roughly 40 cents for every dollar that goes into the general fund is used to pay for education.

Additionally, the Rainy Day Fund - essentially the state government’s savings account - takes 1.5% of the state’s general fund revenues each year, as well as capital gains taxes that exceed 8% of general fund revenues that year. Californians approved the Rainy Day Fund's savings in 2014’s Proposition 2. There is currently $15 billion in that account, according to the Department of Finance.

“These amounts are held in reserve and cannot be withdrawn unless the Governor declares an economic emergency that authorizes a withdrawal from the account, and the Legislature then approves an appropriation from the account (which cannot exceed more than half of the account balance),” H.D. Palmer, a spokesperson for the California Department of Finance, told The Center Square via email on Monday.

California’s 2026-27 budget passed in the state Legislature this year and signed into law by Newsom authorized $351.7 billion in state spending, much of that coming from taxpayers themselves. The latest budget increased slightly from the $321 billion budget in 2025-26.

“It’s encouraging to see revenues continuing to come in stronger than expected, even as federal economic policies are making life harder for California families," Sen. John Laird, D-Santa Cruz and chair of the Senate Budget and Fiscal Review Committee, told The Center Square on Monday. "That’s also a reflection of our responsible approach to budgeting – by using cautious revenue forecasts, we can better manage the state’s finances and prepare for uncertainty. But revenues can fluctuate, and it’s too early to know what these additional funds will mean for Californians. We’ll have a clearer picture when we return next year and can address it then.”

Several Democratic and Republican lawmakers in California also did not respond to The Center Square's request for comment on Monday or declined to comment, and taxpayer-related organizations, such as the California Taxpayers Association, did not get back to The Center Square.