New Tax Rankings Expose the Cost of California’s High-Tax Model

The Tax Foundation’s 2026 Index Shows How Sacramento’s Policies Punish Work, Investment, And Affordability

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⏱️ 7 min read

The 2026 Tax Index Update

Fresh data has a way of cutting through political spin. The Tax Foundation’s 2026 State Tax Competitiveness Index provides a clear comparison of how each state structures its tax system. California’s position is difficult to ignore: 48th out of 50 states.

This ranking does not measure how much revenue a state collects. It evaluates how a tax system is designed—whether it is neutral, stable, and predictable, or distortionary, complex, and economically punitive. By that standard, California sits near the bottom nationally, ahead of only New Jersey and New York in the 2026 Index overall rankings.

This outcome is not the result of geography or circumstance. It reflects years of deliberate policy choices made by Governor Gavin Newsom and Democratic supermajorities in the Legislature. Sacramento has repeatedly moved toward higher marginal rates and added complexity by layering targeted taxes and fees on an already complex system. The result is a structure that extracts more while delivering less and steadily raises the cost of living for working Californians.

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Below the paywall, I break down:

- How Sacramento’s tax structure directly raises the cost of living
- Why high marginal rates discourage work, risk-taking, and investment
- How California’s tax code compares to the states gaining jobs and residents
- Why affordability rhetoric clashes with actual tax policy
- What does this mean for Governor Newsom’s national political ambitions?