Californians are facing a variety of small taxes and fees across the state, which can lead to a surprisingly high cost of living. An analysis points out that these hidden surcharges appear on everyday purchases, from clothing and alcohol to hotel stays.
Take a hotel in Los Angeles, for instance. The advertised rate might be $239 per night, but once you factor in additional charges, the actual cost can go up by around $50 due to various taxes.
When you book a stay at a hotel or Airbnb, there’s a 14% transient occupancy tax that contributes to the city’s general fund. In 2022, the then-Mayor Eric Garcetti signed off on the Hotel Worker Protection Act, which requires hotels to give safety devices, like panic buttons, to workers. This law led hotels to add about $10 to their fees.
Moreover, there are extra charges associated with California’s tourism initiatives and local advertising efforts. “This is literally just a sales campaign,” said Alexander Efros, a financial planner and tax expert. “It’s not really about improving the actual living conditions for residents.”
Then there’s the Los Angeles Ordinance Occupation Tax businesses must pay, which can quickly escalate the original $239 charge to $289 for just one night.
If you’re thinking about grabbing a bottle of wine, there’s a charge there too. The California Redemption Value (CRV) adds 10 cents for any bottle larger than 24 ounces, although it’s refundable when bottles are recycled.
For bottles under 24 ounces, the charge drops to 5 cents each. California’s combined state and local sales tax rate is around 8.99%, making Los Angeles particularly pricey; you’re looking at nearly $10 more for every $100 spent.
Residents like Miles Stapp, from Sonoma County, feel that high taxes have become the norm. “It seems like we just accept it,” he remarked while shopping in LA. “It’s frustrating, and I sometimes wish I could just escape to somewhere with a different reality.”
California’s Senate Bill 478, modified by SB 1548, mandates businesses disclose all mandatory fees. However, while the price you see is the price you pay, numerous taxes still add up on your receipt.
From a business perspective, things can get even more convoluted. Efros joked, “California is the place for you if you enjoy taxes,” comparing it unfavorably to New York in terms of tax collection. He notes that maintaining an LLC can cost up to $8,000 a year, which is hefty compared to other states.
Efros also pointed out the Mental Health Services Act, which collects a 1% tax on personal incomes exceeding $1 million. Many individuals are surprised by these hidden costs that seem to sneak up on them.
While California’s high taxes aren’t new, more residents are choosing to leave, finding that the perks don’t balance out the expense of living there. “The relationship between costs and benefits has changed significantly,” Efros observed, mentioning the persistent issues like traffic and natural disasters.
To complicate matters further, voters will soon decide on a half-cent sales tax increase proposed by the Los Angeles County Board of Supervisors, affecting everyday purchases across the county. Moreover, the City Council has approved a measure that would add an extra 2% to the hotel tax during the 2028 Olympics, reverting to 1% afterward. There’s also talk of a one-time 5% tax on assets exceeding $1 billion.
