As we continue examining the 14 propositions on California’s November 2026 ballot, Proposition 3 turns the spotlight to taxes. Proposition 1, which would authorize bonds for affordable housing, is covered here, while Proposition 2, concerning an expansion of the state’s “rainy day fund,” is discussed here. Proposition 3 would not technically create a new tax increase; instead, it would make permanent a higher income-tax rate that voters approved in 2012.
In 2012, California voters approved a temporary, seven-year state income-tax increase on single filers earning at least $250,000 annually and couples earning $500,000 or more. The law directed all revenue from that increase to local school districts and community colleges. The measure also raised the state sales-tax rate from 7.25 percent to 7.5 percent for four years.
California voters revisited the income-tax increase in 2016, approving an extension from seven years to 12. The temporary sales-tax increase expired as scheduled, returning the statewide rate to 7.25 percent, where it remains. Many Californians may not realize, however, that counties and cities can impose additional sales taxes of their own—a topic for another discussion.
Proposition 3 would make the income-tax brackets established by the 2012 measure permanent. Because the thresholds are adjusted for inflation, the 2025 figures apply to income above $371,000 for single filers, $742,000 for married couples filing jointly and $505,000 for those filing as heads of household. Under the proposal, 89 percent of the revenue would go to local K-12 schools, with the balance directed to community colleges. Local school boards would decide how to spend the money, although administrative expenses would be prohibited. The Legislative Analyst’s Office estimates the annual revenue at between $5 billion and $15 billion.
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State figures show that 5,731,260 students are enrolled in California’s public education system, a 7 percent decline from a decade ago. Enrollment fell another 1.3 percent this year compared with the previous year. With fewer students in the system, one might expect education spending to be reassessed accordingly. Instead, Proposition 3 would lock in a significant source of funding regardless of those enrollment trends.
A more convincing approach would begin with a genuinely independent audit. California could hire a financial firm willing to scrutinize every account, conduct on-site reviews and report its findings without regard to partisan interests. Only after demonstrating that additional funding was truly necessary should lawmakers ask taxpayers for more money. That scenario may be unlikely, but it would offer a stronger basis for a tax increase. Meanwhile, California risks shrinking its own tax base as high earners affected by measures like Proposition 3 continue leaving the state—potentially in greater numbers whether or not the proposition passes.
Editor’s Note: The 2026 Midterms will determine the fate of President Trump’s America First agenda. Republicans must maintain control of both chambers of Congress.
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