business
California Budget Adds Health Provider Tax and Software Sales Tax
State lawmakers approved two tax measures projected to raise about $2.9 billion annually. One extends an existing tax on health care providers; the other applies sales tax to certain digital software products.
Jul 8, 3:56 PM·1m read1 source
New York PostAudio version
Tap play to generate a narrated version.
Developing·Limited corroboration so far. This page will refresh as more sources emerge.
California will impose two new taxes starting next year after lawmakers passed the state budget. One measure extends a tax on health care providers to generate roughly $2 billion annually for Medi-Cal. The other classifies prewritten software products as personal property subject to the state's sales tax, projected to raise $900 million a year.
Health care tax details The health care tax extension applies to providers and could increase private insurance premiums by an average of about $100 per individual or $400 for a family of four. Insurers may pass the added costs to policyholders. Republicans urged federal review of the measure, stating it requires approval from the Centers for Medicare and Medicaid Services.
Software sales tax details The software tax applies to digital products such as communication platforms, artificial intelligence tools, and tax preparation programs. The state's base sales tax rate is 7.25 percent, with some local jurisdictions reaching nearly 12 percent.
A nonpartisan analysis noted that business purchases subject to the tax may raise consumer costs indirectly. State Republicans criticized the overall budget, saying record spending does not improve quality of life. Democrats said the measures address revenue shortfalls.
The California Taxpayers Association described the combined changes as the largest tax increase in state history.
