California state sales tax increase in effect
As part of the larger budget agreement made in February between the Governor and the Legislature, the state’s sales tax increased by 1 percent April 1. The 17-month spending plan approved Feb. 19 calls for $15 billion in program cuts and spending reductions, $12.8 billion in temporary tax increases and $11.4 billion in borrowing.
The sales tax increase is temporary and will sunset June 30, 2012 if voters approve the proposed Budget Stabilization constitutional amendment on the May 19 Special Election ballot. If voters reject the amendment, the rate increase will expire one year sooner, June 30, 2011.
Other tax-related measures connected to the May 19 special election include:
- Vehicle license fee increase: An increase in vehicle license fees will adjust rates from the 0.65 percent to 1.15 percent, except for heavy vehicles. The increase is effective for registrations beginning May 19 and will expire June 30, 2013 if voters approve the proposed spending cap constitutional amendment. If voters reject the amendment, the rate increase will expire two years sooner, on June 30, 2011.
- Personal-income tax increase: Increases existing personal-income tax brackets by .25 percent. The highest rate becomes 9.55 percent, not including the 10.33 percent millionaire surtax. These bracket increases will be reduced to .125 percent if the federal stimulus trigger is pulled as a result of the state receiving at least $10 billion. These changes are effective for the taxable years 2009 and 2010. Alternative Minimum Tax will increase to 7.25 percent, or 7.125 percent if the federal trigger is pulled.