By CalMatters · October 21, 2026
If Proposition 3 looks familiar, it’s because this is the third time the income tax measure has appeared on California ballots. But this time might be the last.
Prop. 3 would permanently extend an income tax on the wealthy to fund schools, healthcare and other state services. It first appeared on the ballot as a temporary tax in 2012 to help schools through the Great Recession, and voters renewed it in 2016. Now, its supporters are asking voters to make it permanent before it expires in 2031.
“I can’t overstate how important this is,” said David Goldberg, president of the California Teachers Association, the state’s largest teachers union and a primary supporter of the measure. “It’s only a tax on the wealthiest Californians, but it’s vital for our schools.”
Prop. 3 would extend a tax on individuals who earn more than $371,000 or couples who earn more than $743,000 annually. It generated between $5 billion and $15 billion a year, fluctuating with the stock market, interest rates and other factors that affect the income of the state’s top earners.
Top earners would continue paying an income tax rate of 12.3% if the measure passes. Tack on the state’s additional 1% tax on income over $1 million for mental health services and California’s highest-earners wind up with an income tax rate of 13.3%, the highest in the nation.
The bulk of the money would be funnelled through the state’s Proposition 98 funding mechanism, which guarantees 40% of the state budget be set aside for K-12 schools and community colleges. If the money surpasses a certain level, the extra would go toward a budget rainy day fund.
Prop. 3 would also pay for healthcare and other services because it frees up money the state would ordinarily spend on schools for other services, according to the Legislative Analyst’s Office. Of the Prop. 98 money, 89% goes to K-12 schools and 11% goes to community colleges.
In flush years, the income tax makes up about 15% of the state’s overall K-12 education budget. If it doesn’t pass, school districts will be forced to lay off up to 50,000 teachers and make other cuts, Goldberg said.