A mystery surge in California tax revenue points to tech companies like Nvidia. Here’s why

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California got a big surge in corporate taxes this summer, with tech companies probably helping chip away at the budget deficit.

California was nearly $2 billion over forecast in corporate tax receipts this summer, including a single $800 million payment in July. A tax change meant to help the budget deficit helped drive the surge.No sooner had Gov. Gavin Newsom cut billions of dollars in spending to close a budget deficit in June than California received an unexpected tax windfall, one that has people in the Capitol speculating about where the avalanche of money came from.

This July, the Finance Department said it collected about $1.4 billion in corporate taxes, nearly three times the agency’s forecast of $500 million. In June, corporate taxes were $263 million above forecast, and in May, $752 million over.

In California, a red-hot tech company fits the bill of outsized profits and risky innovation: Nvidia, which is raking in record amounts of money because of the artificial intelligence boom. Whitaker said most companies try to take advantage of R&D tax credits: “Big Four firms have entire teams dedicated solely to this effort.” But he added that the credits are especially commonly used by tech companies and others whose businesses rely on innovation.It’s hard to tell exactly when those other estimated tax payments will come and how significant they will be, Finance Department spokesperson H.D. Palmer said.

As of last Dec. 31, Alphabet had $18.6 billion in old losses in California. The tech giant also had $6.3 billion in research and development credits.

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