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People in California who are required to file a federal tax return generally must also file a state return.
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California uses a graduated income tax system with nine tax brackets.
The brackets indicate the portions of income taxed at each rate.
California charges an additional tax on incomes above $1 million, bringing the top state tax rate to 13.3%.
Personal income tax is collected in most US states, including California. The Golden State has the highest top tax rate in the country at 13.3%, which includes an extra tax on people with incomes exceeding $1 million.
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How does California tax income?
The personal income tax is California’s largest revenue source, according to the governor’s budget summary. For the 2022-2023 tax year, California estimated it would collect more than $130 billion in personal income tax, comprising about two-thirds of the state’s revenue.
California uses a graduated, or progressive tax system, with nine brackets that apply to taxable income: 1%, 2%, 4%, 6%, 8%, 9.3%, 10.3%, 11.3%, and 12.3%. That means you pay different rates on chunks of your income (after subtracting all the deductions you qualify for).
“The good news for lower and middle-class earners is that the tax burden in California is much less than in other states,” says Lee Reams, the founder and CEO of TaxBuzz, a platform that connects people with tax and accounting professionals and publishes tax news.
For people with incomes above $1 million, there’s an additional 1% tax that raises money for the state’s mental health services, bringing California’s top tax rate to 13.3%. The top federal tax rate is 37%.
“This means that those earning over $1 million per year are paying more than 50% of this higher income in state and federal taxes,” Reams says.
The graduated tax system and millionaire’s tax ensure that the highest-income households in California pay the largest share. In 2019, the top 1% of earners paid nearly 45% of all personal income taxes.
Quick tip: Like the federal government, California has several tax credits and deductions that can help you lower your personal income tax bill.
Who pays California income taxes?
Residents, part-year residents, and nonresidents of California who collect income and are required to file a federal tax return generally must also file a state tax return.
How much you pay in California state income taxes depends on your net taxable income and filing status. Every Californian is entitled to reduce their gross income by a preset amount, known as the standard deduction, before calculating their income tax.
For the 2023 tax year, the standard deductions are:
Filing status
Standard deduction
Single
Married, filing separately
$5,363
Married, filing jointly or
qualifying widow(er)
Head of household
$10,726
Note: The deadline to file and pay California income taxes is April 18, 2024, the same as the federal deadline.
California income tax rates
Calculating your state tax liability when rates are progressive is a multi-step process. Instead of applying a flat rate to your taxable income and paying that amount, you have to figure the tax for different chunks of income called tax brackets.
For example, a 1% tax rate applies to your first $10,412 in taxable income ($104.12); a 2% tax applies to income over $10,412 but under the next income threshold, $24,684 ($285.44); and so on.
Below are the tax rates and income brackets for each filing status in California for 2023.
Single or married, filing separately
Tax rate
Applies to taxable income between
1%
$0 and $10,412
2%
$10,413 and $24,684
4%
$24,685 and $38,959
6%
$38,960 and $54,081
8%
$54,082 and $68,350
9.3%
$68,351 and $349,137
10.3%
$349,138 and $418,961
11.3%
$418,962 and $698,271
12.3%
$698,272 and up
Married, filing jointly or qualifying widow(er)
Tax rate
Applies to taxable income between
1%
$0 and $20,824
2%
$20,825 and $49,368
4%
$49,369 and $77,918
6%
$77,919 and $108,162
8%
$108,163 and $136,700
9.3%
$136,701 and $698,274
10.3%
$698,275 and $837,922
11.3%
$837,923 and $1,396,542
12.3%
$1,396,543 and up
Head of household
Tax rate
Applies to taxable income between
1%
$0 and $20,839
2%
$20,840 and $49,371
4%
$49,372 and $63,644
6%
$63,645 and $78,765
8%
$78,766 and $93,037
9.3%
$93,038 and $474,824
10.3%
$474,825 and $569,790
11.3%
$569,791 and $949,649
12.3%
$949,650 and up
California corporate tax rates
Corporations and LLCs that elect to be treated as corporations pay a flat 8.84% tax on net taxable income to the state of California. Businesses that don’t report a net taxable income have to pay an alternative minimum tax (AMT) of 6.65%.
California has one of the worst business tax climates in the US, according to a 2023 analysis by the Tax Foundation. Just two states — New York and New Jersey — have less favorable tax systems when considering corporate and individual tax rates, property taxes, sales taxes, and unemployment insurance taxes.
“California’s imposing tax rates and formidable regulatory framework for businesses are leading to a decline in investments in industrial sectors,” Reams says. When businesses, such as Tesla, leave the state, it affects job opportunities for “hardworking blue-collar professionals,” he adds.
California state tax rates frequently asked questions
What is the California state income tax rate for 2023?
California has a progressive tax system, just like the federal government, with income being taxed from 1% to 12.3%. There’s an additional 1% assessed on taxable incomes over $1 million, bringing the top marginal tax rate to 13.3%.
What are the California state tax brackets for 2023?
There are nine income tax brackets in California: 1%, 2%, 4%, 6%, 8%, 9.3%, 10.3%, 11.3%, and 12.3%. Each one corresponds to a bracket of income, which varies depending on a taxpayer’s filing status.
Is California the highest taxed state?
California has the highest marginal tax bracket for individuals at 12.3%. It also assesses an additional 1% tax on income exceeding $1 million. California also one of the highest-tax states for corporations, which pay a flat 8.84% tax on net taxable income.
When are California state taxes due?
State income taxes in California are due the same day as federal income taxes, which is April 18, 2024.