California households are paying a higher share of their income in taxes than at any point in the past two decades, according to a new statewide fiscal analysis released this week. The report highlights rising burdens from state income taxes, sales taxes, gas taxes, and property-related assessments—costs that continue to outpace wage growth and the state’s already high cost of living.
According to the findings, the average California family now pays roughly 39% more in combined annual taxes than they did a decade ago. Analysts point to several contributing factors:
- Repeated hikes in state gas taxes
- Rising property assessments across multiple counties
- Higher effective income tax rates due to bracket creep and inflation
- Local sales tax increases approved by cities to fill budget gaps
Many taxpayers say they feel squeezed from every direction. With inflation raising the cost of groceries, utilities, and housing, the additional rise in tax obligations has become a breaking point for some families. Migration data from the U.S. Census continues to show that middle-income households are leaving California at some of the highest rates in the nation, citing financial pressure as their primary motivation.
State Spending Continues to Climb
Despite record tax revenues, California’s state budget challenges remain significant. The Legislative Analyst’s Office recently warned of a multi-billion-dollar structural deficit driven by expanding spending programs and declining revenue projections. Critics argue that Sacramento has become dependent on high taxes while failing to control costs or prioritize accountability.
Experts Warn of Long-Term Risks
Economists caution that California’s tax model—high dependence on upper-income earners paired with aggressive spending—puts the state at long-term fiscal risk.
“The state’s tax base is narrowing while obligations are widening,” one policy expert noted. “This combination becomes dangerous during economic slowdowns.”
Some lawmakers have proposed reforms, including indexing tax brackets to inflation, reevaluating gas tax increases, and adding transparency requirements for new local tax measures.
Growing Support for Taxpayer Protections
Polling suggests rising voter interest in measures that cap tax growth, increase oversight, and require clearer public reporting on how tax revenue is used. Many Californians say they support reforms aimed at protecting working families from further financial pressure.
As Californians continue to shoulder one of the highest tax burdens in the nation, the debate over the future of the state’s fiscal policy is only beginning—and Tax Freedom California will continue monitoring every development.
