Californians typically pay more in federal taxes than the state receives in federal spending each year, making California a “donor state.”1All years in this fact sheet represent federal fiscal years (FFYs), which begin every October 1 and end the following September 30. The data presented in this fact sheet differs from the data included in an earlier Budget Center fact sheet — published in February 2025 — for a few reasons. First, this fact sheet analyzes data for nine fiscal years (FFYs 2015 to 2023), whereas the earlier fact sheet displayed these data for only a single fiscal year (FFY 2022). Second, this fact sheet displays federal spending data in two ways — with and without federal COVID funds — whereas the earlier fact sheet displayed spending data only with COVID funds. Finally, the data for FFY 2022 differ across the two fact sheets because the Rockefeller Institute of Government recently revised the FFY 2022 data. Between federal fiscal years (FFYs) 2015 and 2023, federal taxes paid by California residents and businesses exceeded federal spending in every year except 2020, 2021, and 2023.2FFY 2023 is the most recent year for which the Rockefeller Institute of Government’s 50-state analysis is available. In other words, California was a donor state in six out of the nine fiscal years for which data are available.
California likely would have been a donor state in additional years during this period if not for federal COVID funding. Since 2020, federal expenditures have included the substantial — but temporary — support provided to states, businesses, and individuals to address the COVID pandemic. These one-time COVID funds caused federal expenditures in California to jump significantly, which in turn has understated California’s role as a donor state.3In the four years leading up to the start of the pandemic in FFY 2020, annual federal spending in California hovered between $400 billion and $450 billion. That number jumped to over $750 billion in FFY 2020 as the pandemic took hold and federal COVID spending ramped up. Federal spending in California remained above $600 billion as recently as FFY 2023.
Excluding temporary COVID funds from the analysis provides a more accurate picture of the long-term underlying fiscal trends and California’s true position as a donor state. Using this alternative analysis, between FFYs 2015 and 2023, Californians paid more in federal taxes than the state received in federal spending in eight out of these nine years (2020 is the exception). For example, Californians’ federal taxes exceeded federal spending — excluding COVID spending — by $55 billion in 2021, $101 billion in 2022, and $17 billion in 2023.
Why Is California a Donor State?
Why do Californians typically contribute more to the federal treasury than the state gets back in federal funding? The explanation touches on both the spending and revenue sides of the equation.
On the spending side:
- States with higher poverty rates, a large population of older adults, major federal facilities (such as military bases), a large volume of federal contracts, and/or a substantial federal employee presence are likely to receive a disproportionate share of federal funds. These factors contribute to relatively higher federal spending in many other states (on a per capita basis) compared to California.
On the revenue side:
- States with more wealthy residents and high per capita incomes — like California — account for a disproportionate share of federal tax revenue due to the progressive federal tax system.
H.R. 1 and the Federal Budget
H.R. 1, the harmful Republican mega bill passed in July 2025, will deeply harm Californians by cutting funding for essential programs like health care, food assistance, and education.
See how California leaders can respond and protect vital supports.
With Trump-Era Federal Budget Cuts, the Gap Between California’s Federal Tax Contributions and Federal Spending in the State Will Increase
In July 2025, President Trump signed into law a budget bill (H.R. 1) that will deeply harm Californians by cutting spending for essential programs like health care, food assistance, and education in order to help fund massive tax breaks to the wealthy and corporations, and increased immigration enforcement. The spending cuts included in H.R. 1 will disproportionately impact families with low incomes, immigrants, and communities of color, pushing more people into poverty and widening racial and economic inequities across the state.
State policymakers can mitigate the harm of H.R. 1., however, the massive federal funding cuts are too large to be entirely backfilled with state dollars. As a result, essential services like Medi-Cal health coverage and CalFresh food assistance are in jeopardy as state leaders assess how to address the impact of harmful federal reductions.
Moreover, as the provisions of H.R. 1 are implemented through 2028, the gap between what Californians pay in federal taxes and federal spending in the state will grow larger.
This is because Californians will continue to disproportionately contribute to federal revenues whereas California will get back even less of those dollars as deep cuts to health care, food assistance, and other vital services take effect.
Federal Tax Dollars Should Be Used to Strengthen Essential Services
California contributes much to the nation thanks to the creativity, vitality, and hard work of the nearly 40 million people of diverse backgrounds who call the Golden State their home.
Federal tax dollars — including Californians’ very generous contributions to the federal treasury — should be used to strengthen vital public services and help all people make ends meet, rather than helping corporations and the wealthy avoid paying their fair share of federal taxes.
Update: This fact sheet was revised in August 2025 to include newly released federal tax and spending data from the Rockefeller Institute of Government (federal fiscal years 2015–2023), with revised figures and updated charts.
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