California’s economy isn’t just bigger than Texas and Florida — it’s growing faster, too

California’s competitors like to market themselves as low-tax success stories, but for millions of working Americans, the reality is very different. In 16 states — including Texas and Florida — the lowest-income residents pay a larger share of their income in total state and local taxes than California’s wealthiest 1%. 

World-leading economy

Since Governor Newsom took office, California’s annual GDP has grown by more than $1.18 trillion, reaching $4.25 trillion in 2025. First-quarter 2026 economic output reached an annualized $4.4 trillion, following annual GDP gains exceeding $200 billion in each of the previous two years. 

As the world’s fourth largest economy, California continues to lead the nation where it matters most — creating new businesses, attracting venture capital, driving technological innovation, expanding advanced manufacturing, growing high-tech industries, and producing more than any other state. In fact, The Golden State continues to be: #1 state for new business starts, #1 state for manufacturing, #1 state for venture capital funding, #1 state for high-tech business, #1 state for agriculture 

California also remains home to more businesses than Texas or Florida and continues to be America’s start up capital — with more than 4.3 million small businesses employing 7.6 million Californians.

When it comes to job creation during the first quarter, California added about 131,500 jobs over the previous year — the largest increase of any state. California’s workforce posted a 4.2% productivity increase in 2025, making the Golden State the single largest contributor to national productivity growth and accounting for roughly 14% of total U.S. economic output.
 

“So-called rivals”

While California delivered its best quarterly growth ranking in 13 years, Texas tied for 36th nationally with 0.9% growth and Florida ranked 23rd at 1.6%. California also led the nation’s four largest state economies in fourth-quarter 2025 dollar growth, adding $44.5 billion in economic output — more than New York, Texas, or Florida.
 

California’s recipe for success