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“California is a World Leader in Innovation"
- Gov. Newsom, March 2026
Let’s Keep it
That Way.
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California budget proposals turn their back on the R&D tax credits that made our state a global leader –– threatening our economy, our jobs, and our future.
Governor Newsom once championed a robust tax credit to reward homegrown research and development. New budget proposals reverse course, permanently capping that credit and raising new taxes on software, dealing a massive multi-billion-dollar tax blow to California's economy.
By suddenly penalizing the state's top innovation industries at exactly the wrong time, these proposals threaten to halt pioneering breakthrough cures, drive high-paying engineering and scientific jobs to other states, and raise prices on the software that California consumers rely on –– compromising our position as the world's innovation capital.
What’s at Stake
Innovation isn't an abstract concept - it is the engine that pays California's bills. Capping R&D incentives and raising taxes on software permanently shifts our economic foundation, and the fallout is predictable:
01
A R&D tax:
A direct tax hike on cancer cure research and the sectors spearheading our state's economic growth.
02
Exporting Our Genius:
R&D capital goes where it is welcome. Capping these credits practically rolls out the red carpet for other states and countries to poach our best companies and talent.
03
Killing the Multiplier Effect:
Every dollar invested in California R&D flows nearly three dollars back into the local economy. Killing the incentive kills the downstream revenue that funds our communities.
04
New Tax on Software:
For the first time, the sales tax would reach prewritten software, raising the cost of everyday digital tools that Californians use.
What Happens Next
We can either continue to lead in innovation or watch other states outpace us. The choice belongs to Governor Newsom and Legislative Leadership.
Gov. Newsom and Sacramento Lawmakers: Don’t Raise Taxes on California’s Homegrown Innovation Industries.
Reject the forever cap on California's R&D tax credits and new software taxes.