California Tax Plan Would Shield First $150K

Speaker at outdoor podium with campaign signs — Photo: OogImages / Shutterstock

Steve Hilton proposed making the first $150,000 of income tax-free for Californians, with a simple 8% rate above that.

Story Snapshot

Hilton’s plan: $0 state income tax on the first $150,000; 8% above that.
He links funding to cuts like ending high-speed rail and trimming agencies.
Campaign materials and local coverage repeat the same core design.
California’s current system has nine brackets up to 13.3% at the top.

What Hilton Is Proposing

Gubernatorial candidate Steve Hilton says Californians would pay no state income tax on their first $150,000 of income. All income above that line would face a flat 8% rate. His campaign website states this in clear terms and has made it a top plank of his platform. The plan is framed as relief for workers, young families, and people priced out by high costs. Hilton has repeated this policy across posts, interviews, and local events.

Hilton has pushed the message on social media and in press stops. He posted that the first $150,000 would be tax-free and tied the idea to a broader affordability push. He packages it with goals on gas and utility bills to show a full cost-of-living plan. Local coverage the week of his rollout quoted him using the same $150,000 threshold and 8% rate above it, showing a consistent public pitch since late summer.

How He Says He Would Pay For It

Hilton links the tax cut to “Operation Zero Waste,” which he describes as ending the state’s high-speed rail project, trimming agencies by 5%, and cracking down on health care fraud. He told the Los Angeles Times he would prioritize ending income taxes for earners at or under $150,000 and offset costs with those cuts. Reports also note his team has discussed a large revenue impact, which would require significant savings to balance the budget.

Coverage from KCRA reported the campaign acknowledged the plan could mean up to $65 billion less for the state to work with. That figure highlights why the offsets are central to the pitch. Ending rail funding frees dollars, agency trims promise year-over-year savings, and fraud enforcement aims to recover losses. The campaign has not released a full, line-by-line budget workbook in the public materials reviewed here.

Where This Fits in California’s Tax Picture

California now uses a progressive income tax with nine brackets. The top marginal rate reaches 13.3% when including the surcharge on income over $1 million. That structure relies heavily on high earners and capital gains. Budgets swing when markets swing. A plan that zeroes out tax on the first $150,000 while setting a single 8% rate above that would be a sharp change from the current ladder of rates.

CA next Governor?

Xavier Becerra (D) is the clear favorite to be California's next governor. He's up about 22 to 25 points on Republican Steve Hilton in September polls, and he and the outside groups backing him have raised about $49M to Hilton's $19M. Critically, his record… pic.twitter.com/2xqKp8dHHx

— McNoodle (@reachMcNoodle) October 1, 2026

Analysts and outlets have long noted that the state’s revenue base is volatile. A small share of top earners supplies a large share of income tax collections in many years. That makes any major change to brackets or thresholds both politically powerful and budget sensitive. Voters may see clear relief in their paychecks under Hilton’s frame. Lawmakers would still have to reconcile the math through cuts, enforcement, or other moves to keep the books balanced.

Why People Across the Spectrum Care

Working families feel squeezed by housing, taxes, and energy costs. They hear “first $150,000 tax-free” as real breathing room. Small business owners and independent workers may cheer the simpler 8% rate above that. Others worry about schools, health care, and safety nets if revenues fall and savings do not arrive on time. Both sides share a core worry: leaders promise fixes, but government often fails to deliver savings cleanly or quickly, leaving people to pay the price.

What to Watch Next

Watch for a detailed fiscal plan that lists program cuts, timelines, and enforcement changes. Look for a legislative or ballot-ready draft that shows how the Franchise Tax Board would apply the 0% tier and the 8% rate. Expect debate over who wins and who pays under the new structure. Also watch whether independent budget offices or outside experts review the offsets and the revenue impact. Those steps would move the idea from slogan to statute.