California Gov. Gavin Newsom signed two tax-related bills on July 29 as part of the state’s fiscal 2026-27 budget, setting the stage for new costs for residents and businesses starting Jan. 1, 2027.
One law restructures a tax on health insurance plans, charging $8.85 per member per month to the plan rather than to patients at the doctor’s office. If insurers pass the cost along, the increase could raise premiums by about $100 a year per enrollee, or roughly $400 annually for a family of four. Revenue from the tax will go into the Medi-Cal Stability Fund to help finance Medi-Cal, California’s health coverage program for low-income residents.
The other bill expands sales tax to software downloaded online or accessed remotely, extending a tax that had applied mainly to software sold on physical media. California’s base sales tax rate is 7.25%, and local add-ons can make the total rate higher.
Custom software made for a specific customer is excluded from the tax. The size of any premium or subscription increase will vary by household depending on the plan, employer support and whether the family receives subsidies.
