Los Angeles Weighs New Taxes Amid Mansion Tax Debate

On January 27, 2026, the Los Angeles City Council found itself at the crossroads of fiscal necessity, housing crisis management, and political wrangling. At the heart of the debate were a trio of proposed tax measures intended for the June 2026 primary election ballot, alongside a contentious discussion over whether to reform—or even repeal—the city’s so-called "mansion tax," officially known as Measure ULA.

As reported by City News Service, the council’s agenda brimmed with revenue-raising proposals. The most prominent among them was a plan to increase the transient occupancy tax (TOT), which is essentially a levy on hotel, motel, short-term rental, and hostel stays. Los Angeles currently charges a 14% TOT, but if the council’s proposal advances, that rate would jump to 16%. The measure would also codify the taxability of online travel company markups, aiming to close loopholes and generate an estimated $45.3 million in new annual revenue. To capitalize on the expected influx of visitors for the 2027 Super Bowl and 2028 Olympics, a temporary supplementary 2% charge would push the TOT to 18% from January 2027 through December 2028, potentially yielding an additional $89.3 million. For larger hotels—those with 50 rooms or more—the combined effect of the city’s tax and a separate Los Angeles Tourism Marketing District charge could push the effective TOT to a hefty 20% during that period.

Parking, too, is in the city’s crosshairs. The parking occupancy tax, currently set at 10% for all paid parking except private residences and public meters, is proposed to rise by 5 percentage points to 15%. Officials project this move would add $67.3 million to city coffers annually. The rationale, according to city administrative officer Matt Szabo and finance director Diana Mangioglu, is twofold: boost revenue and, perhaps optimistically, nudge Angelenos toward public transportation or alternative modes of travel. With neighboring cities like Burbank and Santa Monica sporting parking taxes of 12% and 18% respectively, Los Angeles would find itself squarely in the regional mainstream.

The third proposal is a "cannabis business parity tax," designed to ensure unlicensed marijuana businesses are taxed at the same rate as their legal counterparts. The Office of Finance estimates this could bring in $60 million to $80 million annually, though officials acknowledge that revenue would likely taper off as enforcement shuts down illegal operators.

But these measures are just the tip of the iceberg. The council is also contemplating four additional tax ideas for the November 2026 ballot: a 6% major event tax on tickets for gatherings of 5,000 or more, a shared ride tax on Uber, Lyft, and taxis, a vacancy tax targeting empty properties, and a $1 retail delivery fee intended to offset road maintenance costs.

Yet, as the city looked for new ways to shore up its finances, another tax—one already in effect—was the subject of heated debate. Measure ULA, passed by nearly 58% of voters in 2022 and effective since April 2023, imposes a 4% tax on real estate sales over $5.3 million and a 5.5% tax on properties selling for more than $10.6 million. Proponents tout it as a crucial tool for funding tenant aid, eviction defense, rent relief, and affordable housing construction. In fact, supporters celebrated the first $1 billion in revenue raised by the tax just this month.

However, as reported by LAist and City News Service, Measure ULA’s unintended consequences have become impossible to ignore. Multiple economic studies, including research from UCLA and RAND, have shown that the tax, which applies not only to luxury homes but also to new apartment buildings, has contributed to a slowdown in housing development. According to UCLA’s Shane Phillips, sales of properties in Los Angeles have fallen by about 50% more than in neighboring cities since the tax went into effect. "Taxing privately funded mixed-income apartments to subsidize publicly funded apartments is lowering the supply of affordable housing in the city, and it’s making housing more unaffordable for everyone by worsening the housing shortage," Phillips told City News Service. He noted that while permits for single-family homes are up 40%, multifamily permitting has dropped by about 40%, with an estimated 2,000 market-rate units and hundreds of affordable units lost each year.

Recognizing these challenges, Councilwoman Nithya Raman, chair of the Housing and Homelessness Committee, introduced a motion to reform Measure ULA. Her proposal would exempt apartment buildings constructed within the last 15 years and properties affected by natural disasters like the Palisades Fire from the tax. It also seeks to change financing terms for city-funded affordable housing projects, encourage traditional lenders to participate, and require timely legal review of ULA-related actions. Raman argued, "Voters were sold a mansion tax. Ignoring the very real impacts on apartment construction—apartments that people want and need and want to move into—doesn’t protect Measure ULA. It weakens it."

Yet, the council opted not to send the reform measure directly to voters, instead referring it to the Budget and Finance Committee and the Housing and Homelessness Committee for further discussion. This delay means the reforms will not be on the June ballot. If the council acts later, the measure could face off against a separate ballot initiative, backed by the Howard Jarvis Taxpayers Association, aiming to repeal Measure ULA and similar transfer taxes statewide in November. The association, which argues that Measure ULA violates the state constitution and Proposition 13, is actively gathering signatures to qualify its measure. Susan Shelley, the association’s vice president of communications, stated, "Regardless of any changes to Measure ULA that the City Council may propose or enact, the Howard Jarvis Taxpayers Association intends to qualify and campaign to pass the Local Taxpayer Protection Act to Save Proposition 13."

Supporters of Measure ULA, such as Carla De Paz of the United to House LA coalition, remain adamant that the tax is working as intended. "Every day we hear the stories of the tenants who are staying housed, who are not being evicted, who are getting the services they need," De Paz said outside City Hall. She and other advocates argue that efforts to amend the measure distract from its successful implementation and risk undermining critical funding for tenant aid and homelessness prevention.

On the other hand, housing policy researchers and some city officials maintain that reforms are necessary to avoid stifling much-needed housing development. Scott Epstein of Abundant Housing LA summed up the reformers’ perspective: "We want the city to continue to provide the important revenue that we need for tenant protection, homeless prevention and affordable housing production, while not dissuading needed multi-family housing production from the private sector."

As the debate rages on, the council’s decision to refer both the mansion tax reforms and the latest revenue-generating proposals to committee signals that Los Angeles is not yet ready to make a definitive choice. With the housing crisis deepening and city budgets stretched thin, the stakes are only getting higher. The coming months will reveal whether city leaders can strike a balance between raising revenue and encouraging the housing development that Los Angeles so desperately needs.