"But the boom raises questions: Will it continue to be accompanied by a decline in tech and other jobs? Is it a bubble? RELATED: AI regulation battle looms in California despite Trump threats Tax revenue from stock-option withholding paid by some of the state's biggest tech companies made up about 10% of all income tax withholding in 2025, estimated Chas Alamo, the principal fiscal and policy analyst with the LAO."
"Stock options that have vested and are fully owned by employees are treated like ordinary income for tax purposes, so companies pay withholding taxes on some of that income to the state and U.S. governments. Shining a spotlight on where the state's tax revenue comes from is especially timely, when it needs all the revenue it can get. California is expected to have a nearly $18 billion budget deficit this year,"
California's reliance on tech-related tax revenue increased as stock-option withholding reached about 10% of total state income tax withholding in 2025, up from over 6% three years earlier. The estimate used public company filings and data through the second quarter of 2025 and focused on the state's five largest tech firms: Apple, Google, Nvidia, Broadcom and Meta. Vested stock options are treated as ordinary income, prompting withholding payments to state and federal governments. Personal income tax remains the largest revenue source while California faces a nearly $18 billion budget deficit. Growing dependence on AI-driven market gains creates fiscal risk and raises concerns about job displacement and sustainability of the revenue stream.
Read at www.mercurynews.com
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