California sales tax receipts from the local one-cent sales and use tax rose 5.9% in the second quarter of 2026 from a year earlier, adjusted for accounting anomalies, HdL Companies reported on October 26. Receipts totaled approximately $2.5 billion, compared with $2.3 billion in the same quarter of 2025.
Key Takeaways
- Fuel and service stations posted the largest increase among major industry groups, largely reflecting higher prices rather than stronger consumption.
- HdL projects statewide sales tax growth of 3.2% in fiscal 2026–27 and 2.1% in fiscal 2027–28.
What drove California sales tax growth
Receipts from fuel and service stations increased 18.5% year over year. HdL said higher gasoline and diesel prices contributed to the increase even as fuel consumption remained weak. Diesel prices rose nearly 47% from a year earlier.
County and state pools also grew, reflecting continued activity in goods shipped into California. General consumer goods benefited from factors including retail promotions shifting from July into June and World Cup-related activity in the Bay Area and Southern California.
| Item | Details |
|---|---|
| Fuel and service stations | Receipts rose 18.5% year over year |
| County and state pools | Receipts rose 11.8% year over year |
| General consumer goods | Receipts rose 4.5% year over year |
| Building and construction | Receipts fell 0.4% year over year |
| Food and drugs | Receipts fell 0.3% year over year |
Construction and food receipts slipped
Not every industry group shared in the gains. Building and construction receipts declined slightly, as slower residential and commercial development and elevated borrowing costs weighed on the sector, according to HdL’s forecast. Infrastructure and utility improvements, solar projects and roof repairs provided some support.
Food and drug receipts also fell slightly. HdL cited changing consumer preferences, adjustments to drugstore footprints and weaker spending in some categories.
Why the receipts matter to local governments
The local one-cent tax is a portion of California’s sales tax that provides revenue for local government services. The reported figures represent tax revenue collected and allocated, not the total value of taxable sales statewide.
HdL’s September forecast said fiscal 2025–26 sales tax returns increased 3.3% from the prior year. Its projections for the following two fiscal years are forecasts, not reported results.
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