Property Tax Proposals (9 Bills Under Consideration)

State legislators have introduced nine bills this session that would result in increased property tax burdens. These include proposed changes such as a new statewide real estate transfer tax, which could apply a tax of up to 5% of a property's sale price. This would be in addition to existing capital gains taxes. Other proposals under review include changes to property reassessment timelines and exemptions under Proposition 13. There is also early discussion among labor-backed coalitions to place a Proposition 13 repeal measure on the 2026 ballot, which could significantly change how property taxes are calculated statewide.

Payroll Tax Proposal (Governor’s Budget Proposal)

Governor Newsom’s 2025–26 budget includes a proposed increase to payroll taxes, expected to raise approximately $1 billion annually. The stated purpose is to fund expanded state-level social programs. Critics argue this could disproportionately affect small businesses already operating under tight margins, potentially impacting hiring and wage growth.

Vacancy Tax (SB 789 – Sen. Wiener)

SB 789 proposes a new tax on commercial vacancies, targeting unoccupied retail and office space. The legislation is intended to encourage property utilization in areas with high vacancy rates. However, concerns have been raised regarding whether this penalizes property owners still recovering from pandemic-era closures and broader economic shifts. Social Media Usage Tax (AB 796 – Asm. Wicks) AB 796 would impose a usage-based fee on major social media platforms. While details are still being finalized, the proposed tax would apply to companies with a significant number of California users. The intent is to direct revenue toward mental health programs for youth. It is expected that platforms could pass some or all of these costs onto consumers.

Personal Income Tax Increase (AB 1428 – Asm. Lee)

AB 1428 proposes raising California’s top marginal income tax rate to 13.8%, further increasing the nation’s highest state income tax rate. The bill targets high-income earners and aims to support expanded housing and homelessness initiatives. Concerns have been raised regarding potential outmigration of residents and investors.

Mileage-Based User Fee Pilot (AB 1421 – Asm. Friedman)

AB 1421 would implement a pilot program to test a per-mile driving fee, estimated at 6–9 cents per mile. The measure is designed to explore alternatives to the gas tax, which is declining in effectiveness due to the rise of electric vehicles. Based on average mileage, the program could translate to an annual cost of $900–$1,200 per driver, raising questions about equity, privacy, and administrative complexity.

1. ACA 1 (Aguiar-Curry)

Lowers the vote threshold from two-thirds to 55% for local governments to pass special taxes and bonds for infrastructure and affordable housing.

2. ACA 13 (Ward)

Requires ballot measures that change vote thresholds for tax increases to meet the same higher threshold they seek to impose — potentially blocking future efforts to strengthen Prop 13 protections.

3. AB 288 (Rivas)

Authorizes local governments to impose an additional real estate transfer tax, potentially up to 5% of the sale value of homes or properties.

4. SB 555 (Cortese)

Targets vacant and underutilized commercial properties with new tax mechanisms tied to land use efficiency and reassessment criteria.

5. SB 584 (Limón)

Adds a new statewide property tax surcharge on second homes and vacant residential properties, modeled after recent local measures.

6. SB 67 (Becker)

Proposes changes to the property assessment cycle for commercial and industrial properties, increasing frequency and potential tax liability.

7. SB 98 (Wiener)

Expands local authority to levy parcel taxes for climate adaptation and infrastructure, potentially with fewer voter approval requirements.

8. AB 1003 (Ward)

Establishes a state agency to analyze property tax "equity" and recommend policy changes — viewed as laying groundwork for long-term reforms to Prop 13.

9. AB 1331 (Friedman)

Enables regional housing agencies to fund operations through property tax increases in participating jurisdictions.

Los Angeles Budget Bailout Request

Mayor Karen Bass has requested over $600 million in state funding to help cover a growing city budget shortfall — part of a broader deficit that could reach nearly $1 billion. The request follows years of expanding city payroll and rising costs, especially in homelessness services and public employee benefits. Without structural changes, critics warn the city may face recurring crises, raising concerns that taxpayer-funded bailouts could become the norm for large municipalities struggling with unsustainable budgets.

AI Regulation Surge

Over 30 bills have been introduced this session aimed at regulating artificial intelligence — with no unified framework or clear long-term plan. While tech accountability is a valid concern, AI is currently one of California’s fastest-growing industries and a major driver of tax revenue. Overregulation could jeopardize innovation, investment, and the state’s competitive edge.

Sports Betting Proposition Talks

Although no new ballot measure has been formally introduced yet, there are active discussions between tribal interests and online platforms like FanDuel about reviving sports betting legislation. If a deal is struck, it could sideline local card rooms — a repeat of 2022's battle — with major tax implications for cities like Hawaiian Gardens and others that rely heavily on card room revenue.

Refinery Closures and Fuel Costs

Two more California refineries have announced plans to shut down, a move many attribute to the state’s increasingly strict environmental regulations. A USC study warns these closures could push gas prices as high as $8 per gallon, worsening the cost-of-living crisis and placing further strain on working-class commuters and regional economies