California Local Sales Tax Receipts Increase 5.9% in Second Quarter 2026

BREA, Calif., Oct. 26, 2026 (GLOBE NEWSWIRE) — HdL Companies reports that California’s local one-cent sales and use tax receipts increased 5.9% in the second quarter of 2026 compared with the same period a year ago, after adjusting for accounting anomalies. Adjusted statewide receipts totaled approximately $2.5 billion, compared with $2.3 billion in the second quarter of 2025.

The local one-cent sales and use tax is a portion of California’s sales tax that provides critical revenue to local governments for consistent services. These receipts reflect tax revenue collected and allocated, rather than the total dollar value of taxable sales statewide.

Second Quarter 2026 Key Findings

• Statewide growth: 5.9% YoY increase in adjusted local sales tax receipts to approximately $2.5B.
• Leading industry: Fuel and service stations recorded the largest increase among major industry groups, rising 18.5% YoY. This primarily reflects higher fuel prices rather than stronger consumption.
• Mixed industry performance: County and state pools increased 11.8%, while building and construction declined 0.4% and food and drugs decreased 0.3% YoY.

Industry Trends: Higher Fuel Prices and Consumer Spending Drive Results

Fuel and service stations led statewide industry growth, with receipts increasing 18.5%. According to HdL Companies’ September 2026 California Consensus Forecast, higher gasoline and diesel prices contributed to the increase, even as fuel consumption remained weak. Diesel prices increased nearly 47% year over year, contributing to approximately 42% growth in taxable sales for the Petroleum Products & Equipment business category.

Other major industry groups also reported gains. County and state pools increased 11.8%, reflecting continued activity in goods shipped into California. General consumer goods rose 4.5% YoY, influenced by summer retail promotions shifting from July into June, World Cup-related activity in the Bay Area and Southern California, and shoppers seeking fuel discounts at big-box retailers.

Business and industry receipts were also positive, supported by online shopping, orders fulfilled through California distribution centers, technology purchases, and regional energy projects. Performance varied across business categories, however, with weaker activity among some agricultural, garden and winery-related suppliers.

Construction, Restaurants, and Food Retail Pressures

Building and construction results were slightly negative during the quarter. HdL’s forecast attributes continued pressure to slower residential and commercial development and elevated borrowing costs. Public infrastructure, utility improvements, solar projects, and roof repair activity provided some upward support.

Restaurants and hotels continued to experience softer traffic. Operators have responded with loyalty programs, delivery services, menu adjustments, and carefully managed price increases. Tourism and travel spending remain important contributors, although local performance varied by market.

Food and drug revenues remained under pressure as consumer preferences shifted, drug stores continued to adjust physical footprints, and some categories experienced weaker spending. HdL’s consensus forecast also identified changing consumer preferences as factors affecting convenience-oriented businesses.

Regional Trends Across California

Regional differences are key when interpreting statewide performance. HdL’s forecast identifies event-related spending in Southern California and the Bay Area as a contributor to general consumer goods activity, while regional energy and infrastructure projects supported selected business and construction categories. These industry-specific developments can produce different revenue patterns across communities, even when statewide receipts increase overall.

What the Results Mean for Local Governments

HdL’s latest analysis reinforces the importance of distinguishing price-driven revenue increases from underlying changes in consumer and business activity.

“Statewide sales tax growth is encouraging, but understanding what’s behind the numbers is just as important as the increase itself,” said Andy Nickerson, CEO of HdL Companies. “Higher fuel prices, changing shopping patterns, and variances across industries can affect communities in very different ways. By looking beyond the headline figures, local government leaders can make more informed forecasts, plan responsibly, and protect the services residents depend on.”

The Company’s September forecast reports that California’s fiscal year 2025-26 sales tax returns increased 3.3% over the prior year. Looking ahead, HdL projects statewide growth of 3.2% for fiscal year 2026-27, and 2.1% for fiscal year 2027-28.

For local governments, monitoring industry performance, evaluating regional differences, and updating forecasts according to the most recent data can help agencies respond to changing economic conditions while planning for continued service delivery.

About the Data

HdL Companies analyzes statewide and regional California sales tax receipts and develops quarterly forecasts to help local governments understand revenue trends. Adjusted figures remove accounting anomalies to better reflect underlying economic activity.

Access HdL Companies’ California Consensus Forecast Report

About HdL Companies

HdL Companies helps local governments safeguard and grow revenues that sustain essential services. Our partners strengthen trusted compliance, protect municipal revenue, and reduce program costs to better serve their communities. More than 900 cities, counties, and special districts rely on HdL for sales tax analytics, local tax administration, economic development support, and other revenue solutions. Since 1983, the company has driven $4B in recovered revenue for local agencies. Learn more at HdLCompanies.com.

Media Contact

Melissa Heiselt

Marketing Analyst, HdL Companies

solutions@hdlcompanies.com

714.879.5000

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