Newsom Signs Legislation to Spike Sales Tax to 11.25%

Governor Gavin Newsom has signed legislation allowing local politicians to push sales tax rates to 11.25% in California—adding another cost to families already struggling with the state’s affordability crisis.

AB 1768 allows Los Angeles and Contra Costa counties to exceed California’s existing 2% cap on local transactions and use taxes. The law authorizes Los Angeles County to impose an additional tax of up to 0.5% and Contra Costa County to impose an additional tax of up to 0.625%.

“Gavin Newsom and California Democrats caused our cost-of-living crisis, and now they are giving local politicians another way to raise taxes on working families,” said Reform California Chairman and State Assemblymember Carl DeMaio.  

Newsom Removes the Taxpayer Protection Cap

California law limits the combined local transactions and uses taxes imposed within a county to 2%. AB 1768 creates an exemption from that limit specifically for Los Angeles and Contra Costa counties.

The legislation allows the counties to place additional sales tax increases before voters through December 31, 2031. The bill was passed as an urgency measure and took effect immediately after Newsom signed it on June 1, 2026.

Officials with the City of Beverly Hills opposed the bill warning Newsom that the legislation could push the total sales tax rate to as high as 11.25% in some Los Angeles County communities.

The city also warned that another sales tax increase would burden residents and small businesses, discourage consumer spending, and place local retailers at a competitive disadvantage.

“California families are already paying some of the highest taxes in the country,” DeMaio said. “Instead of cutting waste and fixing government, Newsom and California Democrats keep changing the rules so politicians can demand even more money from taxpayers.”

Sales Taxes Hit Working Families Hardest

Unlike income taxes, sales taxes are imposed whenever consumers purchase taxable products, regardless of how much money they earn.

That means working families and lower-income Californians are forced to spend a larger portion of their income paying the tax. Small businesses are also affected when higher prices discourage customers from making purchases or push them to shop in lower-tax communities.

AB 1768 follows a growing pattern of Newsom and state lawmakers granting exemptions from California’s local sales tax cap. In 2025, Newsom signed three additional bills allowing local governments or regional agencies to exceed the cap and pursue higher sales taxes.

Prop 43 Would Make Local Tax Hikes Harder to Pass

DeMaio says Californians can fight back by passing Proposition 43—the Save Prop 13 Taxpayer Protection Initiative—in the November 2026 election.

Prop 43 would restore the two-thirds vote requirement for local special tax measures, closing a loophole that allows local politicians and special interests to pass certain tax increases with only a simple majority.

“California politicians will never stop raising taxes unless voters take away their ability to manipulate the rules,” DeMaio said. “Prop 43 will restore taxpayer protections and make it harder for local politicians to impose an outrageous 11.25% sales tax.”

California Democrats caused the state’s cost-of-living crisis, but voters have the power to stop them.

Join the fight to pass Prop 43 and block higher sales taxes in your community at OpposeTaxHikes.org.