{"id":73574,"date":"2026-05-16T10:26:13","date_gmt":"2026-05-16T10:26:13","guid":{"rendered":"https:\/\/www.europesays.com\/people\/73574\/"},"modified":"2026-05-16T10:26:13","modified_gmt":"2026-05-16T10:26:13","slug":"gavin-newsom-wants-to-slap-a-new-tax-on-commonly-used-tech-3","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/people\/73574\/","title":{"rendered":"Gavin Newsom wants to slap a new tax on commonly used tech"},"content":{"rendered":"

Gov. Gavin Newsom is going after Silicon Valley<\/a> with a sweeping proposal to expand the state\u2019s sales tax into cloud software, AI platforms and digital applications \u2014 a move projected to generate more than $1 billion in its first year and reshape how the digital economy is taxed.<\/p>\n

The plan does not create a new standalone surcharge, it broadens California\u2019s existing sales tax system<\/a> so it applies more consistently to software products sold online.<\/p>\n

The state\u2019s base sales tax rate<\/a> is 7.25%, with local taxes able to push the total higher depending on where a buyer is located.<\/p>\n

Gov. Gavin Newsom is going after Silicon Valley with a sweeping proposal to expand the state\u2019s sales tax into cloud software, AI platforms and digital applications AP Photo\/Jeff Chiu<\/p>\n

The plan does not create a new standalone surcharge, it broadens California\u2019s existing sales tax system so it applies more consistently to software products sold online. Christopher Sadowski<\/p>\n

The state\u2019s base sales tax rate is 7.25%, with local taxes able to push the total higher depending on where a buyer is located. Christopher Sadowski<\/p>\n

At the center of the proposal is \u201cprewritten computer software\u201d and Software-as-a-Service products, particularly enterprise tools used by businesses and large organizations.<\/p>\n

The administration has explicitly excluded digital entertainment streaming services such as Netflix and Spotify from the new tax rules.<\/p>\n

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Newsom has framed the effort as closing a fairness gap in the tax code. He pointed to a discrepancy in how software is taxed depending on how it is purchased.<\/p>\n

\u201cI\u2019m at Best Buy often, and I\u2019m paying sales tax on a lot of this pre-written software, and then I find out all my friends that aren\u2019t near a Best Buy, they\u2019re downloading it and they\u2019re not paying sales tax. Well, how is that fair?\u201d Newsom said during Friday\u2019s press confrence.<\/p>\n

The governor\u2019s office says the majority of the impact will fall on business-to-business software transactions, which account for roughly 75% of the projected economic effect.<\/p>\n

Exterior view of a Microsoft office.\u00a0 Getty Images<\/p>\n

Still, some consumer-facing subscriptions could see higher costs if the proposal becomes law.<\/p>\n

That includes widely used platforms such as Microsoft 365, Adobe Creative Cloud, Slack, QuickBooks Online and enterprise AI systems.<\/p>\n

Premium consumer subscriptions tied to productivity and AI tools could also be affected, depending on how the final rules are written.<\/p>\n

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California officials estimate the proposal would raise about $1.1 billion in combined state and local revenue in the upcoming fiscal year, rising to roughly $2 billion annually over time.<\/p>\n

The push comes as California\u2019s budget outlook has strengthened significantly, with revenues running $16.5 billion above earlier projections and eliminating projected deficits for the current and next fiscal years.<\/p>\n

\u00a0Slack logo of a business communication platform is seen on a smartphone and a pc screen. SOPA Images\/LightRocket via Getty Images<\/p>\n

Despite the windfall, the revised budget avoids major new spending increases and largely steers clear of deep cuts.<\/p>\n

Alongside the software tax expansion, Newsom\u2019s budget proposal also includes a reduction in the first-year filing tax for newly formed limited-liability companies.<\/p>\n

California would not be alone in moving in this direction.<\/p>\n

Still, some consumer-facing subscriptions could see higher costs if the proposal becomes law. Getty Images<\/p>\n

More than 30 states already tax digitally delivered software in some form, and more than 20 already apply sales tax to cloud-based SaaS products.<\/p>\n

The proposal remains part of ongoing budget negotiations and must be approved by the California Legislature before it can become law.<\/p>\n

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