California · 2027 and beyond

California in 2027 and beyond: what is already law, and what is still open

Proposition 3 passed and the billionaire tax failed. The top brackets are now permanent; the 2026 return is unchanged. What is on the 2026 return, what starts with tax year 2027, and what is scheduled or conditional after that.

By Charles Trautman, EA, editor

Need to Know Tax · written from California Franchise Tax Board sources and the unofficial November 3 election returns, November 12, 2026 · not yet reviewed by a California practitioner

Proposition 3 passed and the billionaire tax failed. The top brackets are now permanent; the 2026 return is unchanged. This page keeps apart three things that get mixed together in the news: what is on the 2026 return you file in early 2027, what begins with tax year 2027, and what is scheduled, conditional or still undecided after that. Election figures are the unofficial November 3, 2026 returns and are not final until the state certifies them.

What the voters decided on November 3, 2026

California tax measures, November 3, 2026
Measure	Result	What it does
Proposition 3	Passed	Makes the 10.3%, 11.3% and 12.3% brackets permanent; they had been due to expire after 2030. About 59% yes.
Proposition 40	Rejected	A one-time 5% tax on net worth above $1 billion. About 55% no.
Proposition 42	Passed	Bars new state taxes on owning personal property, including savings and retirement holdings, and bars retroactive taxes.
Proposition 41	Rejected	Would have limited new taxes outside the state spending limit.
Proposition 43	Rejected	Would have required a two-thirds vote for local special taxes proposed by initiative.

Unofficial returns. Results become final when the state certifies them, usually by early December.

This return, next year, and later

California: what applies when
When	What applies
The 2026 return, filed in early 2027	Brackets, the standard deduction and exemption credits rose 3.4% with inflation; the rates did not change.
	California does not follow the federal deductions for tips, overtime, seniors or car-loan interest.
	No net-worth certification is added to the return, because Proposition 40 failed.
	Up to $20,000 of military retirement pay is excluded for 2025 through 2029 when federal AGI is $125,000 or less ($250,000 joint).
Starting with tax year 2027	No rate change. Brackets are indexed again.
Starting with tax year 2027	The elective pass-through entity tax continues; it was extended through tax years beginning before 2031.
2028 and later, or conditional	After 2030 the top three brackets stay in place instead of expiring.
2028 and later, or conditional	The military retirement exclusion ends after 2029 unless extended.

Items under 2027 and later do not change the 2026 return. They matter for 2027 withholding, estimated payments and planning. The detail behind each line is in the other California articles.

The 2025 federal law and the California return

Senate Bill 711 moved California’s conformity date to January 1, 2025, six months before the federal act of July 4, 2025. So California “in general does not conform” to that act, and the differences are added back on Schedule CA (540).

That is the reason a change on the federal return, such as the deductions for tips, overtime and people 65 and older, may or may not show up on the California return. The federal side is in The new deductions for tips, overtime and seniors.

What to watch

Certification of the vote in December, and any 2027 conformity bill. When something on this page changes, the change is logged on the updates page with its date.

What to bring

Your 2026 federal and California returns, once filed, to set 2027 withholding and estimated payments against them
Your last pay stub of 2026 and the first of 2027, to see whether withholding changed
Any notice from the state about a 2027 rate, credit or filing change

Questions people ask

Does anything here change the California return I file in early 2027?

Only what is listed under the 2026 return. Everything listed under 2027 or later affects withholding, estimated payments and planning, not the return for 2026.

Are the election results final?

Not yet. The figures on this page are the unofficial returns. The state certifies results in the weeks after the election, and this page will be corrected if anything changes.

How will I know if this page changes?

Every change is logged on the updates page with its date and the article it affects. State legislatures meet in early 2027 and some act before the filing deadline.

California, after the election

Proposition 3 passed and the billionaire tax failed. The top brackets are now permanent; the 2026 return is unchanged.

Written by Charles Trautman, EA, editor  ·  Need to Know Tax, Lone Tree, Colorado
Questions about this article in California are answered by [your practice name]  ·  [your phone]  ·  [your email address]. We’re looking for an EA or CPA in each California city to hold that city’s seat and take this spot — is that you?
Ask a question about this article →

An invitation to California EAs and CPAs

These California pages were written by the editor from the California Franchise Tax Board’s own publications, and they need a California practitioner’s eye. One enrolled agent or CPA in each California city holds that city’s seat: reads these pages before the filing season and is credited as a reviewer, is named on every page of their city’s edition, and answers its readers’ questions. $1,000 for the 2026 season, the charter price. Take your city’s seat (a two-minute form and a card), tell us you’re interested, write to editor@needtoknowtax.com, or read how it works.

Sources and where to check

Written November 12, 2026 · after the November 3 election · awaiting review by a California practitioner