California Business Taxes Increasing to Cover Budget Deficits

Due to California’s significant budget deficits in the current and future fiscal years, businesses will pay higher taxes to help bridge the gap between spending and revenues.

At issue are taxes businesses pay to the state, including no longer being able to take net operating loss deductions—which have allowed them to carry losses forward and pay fewer taxes—and debts owed to the federal government for unemployment benefits paid during the pandemic.

According to a May report from the nonpartisan Legislative Analyst’s Office, not being able to take the operating loss deduction could cost businesses statewide up to $2 billion in the current fiscal year and more than $5 billion subsequently.

Such places “California out of step with every other state in the country that levies a corporate income tax,” a coalition of business advocates and chambers of commerce from across the state wrote in a letter—shared July 12 with The Epoch Times—to the Legislature in May. “While other states are trying to jump-start job creators, these provisions would do the opposite to California employers.”

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