CA's AI Boom Fuels Tax Revenue But Tech Jobs Continue to Fall
2/7/2026 | 2mVideo has Closed Captions
AI stock gains boost taxes, but layoffs and risks cloud outlook.
California is collecting a growing share of income tax revenue from the AI boom, driven by stock option withholding at major tech firms. Analysts warn the gains come with little job growth, rising unemployment and the risk that an AI bubble could burst, sharply cutting state revenue if markets turn.
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SoCal Matters is a local public television program presented by PBS SoCal
CA's AI Boom Fuels Tax Revenue But Tech Jobs Continue to Fall
2/7/2026 | 2mVideo has Closed Captions
California is collecting a growing share of income tax revenue from the AI boom, driven by stock option withholding at major tech firms. Analysts warn the gains come with little job growth, rising unemployment and the risk that an AI bubble could burst, sharply cutting state revenue if markets turn.
Problems playing video? | Closed Captioning Feedback
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Learn Moreabout PBS online sponsorshipCalifornia is seeing increasing financial benefits from the artificial intelligence boom.
About 10% of all income tax withholding in 2025 comes from some of California's biggest tech companies, that pay tax revenue from stock option withholding.
According to the Legislative Analyst's Office, that's up from more than 6% just three years ago.
But the AI boom raises questions will it continue to be accompanied by a decline in tech and other jobs?
Is it a bubble?
If the AI bubble pops.
California could see a steep drop in tax revenue.
That's because there's been little job growth and wages are not rising, said Chris Alamo of the Legislative Analyst's Office.
In November, the most recent data available, California's unemployment rate rose to 5.5%, the highest among U.S.
states.
Despite the AI boom, according to the Bay Area Counci.. the number of tech jobs in the Bay area actually decreased from September 2024 to August 2025.
Jobs in the information industry were down 1.3% over that period, while jobs in professional and business services fell 1.5%.
Some tech companies, such as Salesforce, mentioned AI as a factor when it laid off thousands of employees.
There's no consensus about whether this tech boom is set to go bust anytime soon, Jensen Huang, Chief Executive of Chipmaker Nvidia, told investors in November, quote, there's been a lot of talk about an AI bubble.
From our vantage point, we see something very different.
Meanwhile, California leads all states in trying to regulate AI and is expected to fight against the president's recent executive order to develop federal laws around AI that would supersede state laws.
For CalMatters.
I'm Robert Meeks, with reporting by Levi Sumagaysay.
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SoCal Matters is a local public television program presented by PBS SoCal