California’s sales tax will drop by a quarter of a percent in the new year. The reduction comes from the partial expiration of a statewide ballot measure that helped end California’s budget crisis.
Four years ago, voters approved Proposition 30, which raised the income tax significantly on the wealthiest Californians and raised the sales tax a tiny bit on everyone.
That quarter-of-a-cent increase equated to paying an additional $0.01 on a $4 coffee; $1 on a $400 television; and $100 on a $40,000 car.
Voters extended Proposition 30’s income tax increases in last month’s presidential election with Proposition 55 – but that initiative allowed the Prop 30 sales tax hike to expire.
As a result, California’s lowest sales tax rate drops from 7.5 percent to 7.25. Many cities and counties have tacked on additional sales taxes, meaning the highest rate drops from 10 percent to 9.75.
The state’s sales tax rates remain among the highest in the nation.
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