Newsom Proposes $349.4 Billion California Budget With 7.25% Software Tax and $9.7 Billion Reserve
Updated
Updated · KCRA Sacramento · May 14
Newsom Proposes $349.4 Billion California Budget With 7.25% Software Tax and $9.7 Billion Reserve
5 articles · Updated · KCRA Sacramento · May 14
$349.4 billion is the size of Newsom’s final California budget plan, which would be the state’s largest ever and adds a new 7.25% sales tax on digital software starting Jan. 1, 2027.
$16.5 billion in extra tax revenue over three years — fueled by strong personal income tax collections tied to the AI-driven stock market — underpins the proposal, with $9.7 billion slated for a temporary surplus holding account.
$450 million in the next budget year and $900 million annually after that is the projected take from taxing prewritten software and software-as-a-service products such as Microsoft Office, Adobe, Slack and Workday.
$300 million for families hit by lost ACA subsidies, a cut in LLC fees to $400 from $800 for about 250,000 new small businesses, and a $5 million cap on large corporate tax credits are among the other fiscal changes.
$2.4 billion more a year for special education, $100 million for Los Angeles wildfire rebuilding and lower affordable-housing fees round out a plan aimed at shoring up a state still facing structural budget gaps beyond Newsom’s term.
Is California's AI-fueled budget surplus a temporary illusion masking a deeper fiscal crisis?
As California spends its tech windfall, is it building a stronger future or a house of cards?