California's income tax rates range from 1% to 13.3%, depending on how much you earn

California taxes your income on a sliding scale. The more you earn, the higher percentage you pay. The state's lowest bracket is 1% on income under $10,000 (for single filers in 2024), and the highest is 13.3% on income over $680,000. These brackets adjust slightly each year for inflation.

California also adds a 1% tax on income over $1 million — this is separate from the regular income tax and was created to fund mental health services. So if you earn $2 million, you pay the 13.3% rate on most of it, plus an extra 1% on the amount above $1 million.

The state taxes wages, self-employment income, interest, dividends, and capital gains the same way. If you're retired and living on Social Security, that income is not taxed by California. Pensions and 401(k) withdrawals are taxed as regular income.

Key Takeaways

  • California's income tax brackets range from 1% to 13.3%, with rates increasing as income rises, and brackets adjust annually for inflation.
  • An additional 1% tax applies to income over $1 million, separate from regular income tax rates.
  • Social Security benefits are not taxed by California, but pensions, 401(k) withdrawals, and investment income are taxed as regular income.
  • Sales tax in California is 7.25% statewide, but most counties add local taxes, bringing the total to between 7.25% and 10.75%.
  • Property tax is 1% of the assessed value in most California counties, though some add voter-approved local taxes on top of that.

How California's income tax brackets work

California uses a progressive tax system, which means you don't pay the same rate on all your income. Instead, your income is divided into brackets, and each bracket is taxed at its own rate. If you're single and earn $50,000, you don't pay 9.3% on the whole amount — you pay 1% on the first portion, then 2% on the next portion, and so on, until you reach the bracket your income falls into.

For 2024, single filers move through these brackets: 1% up to $10,000; 2% from $10,000 to $23,942; 4% from $23,942 to $37,788; 6% from $37,788 to $52,455; 8% from $52,455 to $66,295; 9.3% from $66,295 to $340,328; 10.3% from $340,328 to $410,011; 11.3% from $410,011 to $680,063; and 13.3% above $680,063. Married couples filing jointly have higher income thresholds for each bracket.

These bracket limits change every January to account for inflation. The Franchise Tax Board publishes updated brackets each year, so if you're planning ahead, check their website for the current year's numbers.

Sales tax varies by county, from 7.25% to 10.75%

California's base sales tax is 7.25%, but that's rarely what you actually pay. Most counties and cities add their own local sales taxes on top of it. The total you pay depends on where you make the purchase.

In Los Angeles County, for example, the combined rate is 9.5%. In San Francisco, it's 8.625%. In some rural counties, you might pay closer to 7.25%. The easiest way to find your local rate is to search "sales tax [your city]" or check the California Department of Tax and Fee Administration website, which has a lookup tool by ZIP code.

Sales tax applies to most goods, but not to groceries, prescription medications, or medical devices. Services like haircuts, repairs, and professional fees are generally not taxed. If you buy something online from an out-of-state seller, California sales tax still applies if the seller has a physical presence in the state or meets certain sales thresholds.

Property tax is 1% of assessed value, plus local additions

California property tax is calculated as 1% of the property's assessed value. When you buy a home, the county assessor determines its value, and you pay 1% of that amount annually. If your home is assessed at $500,000, your base property tax is $5,000 per year.

However, most counties add local taxes on top of this 1% base rate. These are usually voter-approved measures for schools, fire departments, or other services. Your total property tax bill might be 1.1% to 1.3% of assessed value, depending on where you live. Your property tax bill will show the breakdown of all these components.

Property values are reassessed when you buy a home or make major improvements. Proposition 13, passed in 1978, limits how much the assessed value can increase each year — typically no more than 2% annually — even if the market value of your home rises faster. This means your property tax can stay relatively stable over time, but it also means newer homeowners often pay more tax than long-time residents with similar homes.

Federal taxes are separate from California state taxes

California state income tax is in addition to federal income tax, not instead of it. When you file your taxes, you file both a federal return (Form 1040) and a California return (Form 540). The federal government takes its share, and California takes its share.

Your federal tax brackets are different from California's and are usually lower. You can deduct California state income taxes paid on your federal return (up to $10,000 per year under current federal rules), which reduces your federal taxable income slightly. This deduction is called the SALT deduction and applies to state income tax, property tax, and sales tax combined.

If you work for an employer, both federal and state taxes are withheld from your paycheck. If you're self-employed, you pay both federal and California taxes through quarterly estimated tax payments.

Special taxes and fees you might encounter

Beyond income, sales, and property tax, California has several other taxes that explore in specific situations. If you own a vehicle, you pay vehicle registration fees based on the vehicle's value — this is sometimes called a "car tax," though it's technically a registration fee. The amount depends on the vehicle's age and value.

California also has an excise tax on gasoline (currently around 68 cents per gallon, though this changes), which is included in the price you pay at the pump. There's an excise tax on cigarettes and vaping products, and a tax on alcohol sales. If you own rental property, you may owe additional taxes on the rental income.

Some counties have local business taxes or gross receipts taxes if you operate a business. These vary widely by location, so check with your city or county if you're self-employed or starting a business.

How to find your exact tax rate

Your exact tax burden depends on your specific situation — your income level, where you live, what you own, and how you earn money. The California Franchise Tax Board website has calculators and tools to estimate your state income tax. For sales tax, use their ZIP code lookup tool. For property tax, check your county assessor's website or your property tax bill.

If you're employed, your paycheck stub shows your federal and state tax withholding. If you're self-employed or have investment income, you may need to make quarterly estimated tax payments. A tax professional or accountant can help you understand your specific situation and plan ahead.

Frequently Asked Questions

Do I have to pay California income tax if I moved out of state?

No, once you establish residency in another state, you don't owe California income tax on income earned after you leave. However, California may challenge your residency if you still own property there or spend significant time in the state. Keep documentation of your move — a lease or purchase agreement in the new state helps prove residency.

Why is California's top income tax rate so high?

California's 13.3% rate is the highest in the nation. The state has chosen to fund schools, healthcare, and social services through higher income taxes on top earners. The additional 1% tax on income over $1 million was approved by voters in 2012 specifically to fund mental health services.

Is there a state earned income tax credit in California?

Yes. California offers an Earned Income Tax Credit (CalEITC) for low-income workers. The amount depends on your income and filing status. You claim it on your state tax return (Form 540). The California Franchise Tax Board website has a calculator to estimate your credit.

What happens if I don't pay California taxes?

The Franchise Tax Board can impose penalties, interest, and liens on your property. If you owe a significant amount, they may garnish your wages or intercept your federal tax refund. If you can't pay in full, you can set up a payment plan with the state.

Are retirement accounts taxed differently in California?

Traditional 401(k) and IRA withdrawals are taxed as regular income. Roth IRA withdrawals are not taxed. Military pensions have special treatment — they're partially excluded from California income tax. Social Security is not taxed by California. Check the Franchise Tax Board website for details on your specific retirement income type.