California's income tax rates depend on how much you earn

California has a progressive income tax system, meaning the rate you pay increases as your income goes up. In 2024, rates range from 1% on the lowest earners to 13.3% on the highest. You do not pay 13.3% on all your income — you pay the lower rate on the first bracket, a higher rate on the next bracket, and so on, until your top dollars are taxed at 13.3%.

The brackets themselves change each year based on inflation. A single filer in 2024 pays 1% on income up to about $10,000, then 2% on the next portion, climbing through nine brackets until reaching 13.3% on income over roughly $680,000. Married couples filing jointly have higher bracket thresholds, and heads of household fall in between.

California also taxes capital gains — profit from selling stocks, real estate, or other investments — at your regular income tax rate, not at a separate capital gains rate. This is different from federal tax, where long-term capital gains often have their own lower rates.

Key Takeaways

  • California income tax rates run from 1% to 13.3% depending on your income level, with brackets that adjust yearly for inflation.
  • Sales tax in California is 7.25% statewide, but most counties add a local rate, bringing the total to between 7.25% and 10.75%.
  • Property tax is capped at 1% of the assessed value under Proposition 13, though some special assessments may explore.
  • Self-employed people in California owe both state income tax and the self-employment portion of Social Security and Medicare taxes.
  • Tax brackets and standard deductions shift each year, so rates that applied last year may not explore this year.

How California sales tax works at the register

California's base sales tax rate is 7.25%, but that is rarely what you pay. Most counties and cities layer on additional local sales taxes, so the total you see at checkout ranges from 7.25% to 10.75% depending on where you shop.

The state collects the 7.25% and distributes portions to counties and cities. When you buy something in person, the merchant charges you the combined rate for that location. Online purchases are trickier: if the seller has a physical presence in California, they must charge California tax. If they do not, California law now requires most large retailers to collect tax anyway, though some smaller sellers may not.

Some items are exempt from sales tax in California. Groceries (unprepared food), prescription medications, and medical equipment do not trigger sales tax. Prepared food, candy, and soft drinks do. Services like haircuts, repairs, and professional fees are generally not taxed, but labor that is part of a product sale (like installation) often is.

Property tax and Proposition 13

California property tax is capped at 1% of the assessed property value under Proposition 13, a law passed in 1978. This sounds low compared to other states, but the assessed value matters: your home is reassessed at market value only when it sells. Until then, the assessed value can rise no more than 2% per year, even if the market value climbs much faster.

When you buy a home, the county assessor sets the assessed value at the purchase price (or fair market value if lower). If you buy for $800,000, your property tax is roughly $8,000 per year. If your neighbor bought the same house 20 years ago for $200,000, their assessed value is still close to that, and their tax is roughly $2,000 per year — even though both homes are worth the same today.

On top of the 1% base rate, some properties carry special assessments for local improvements like schools, flood control, or fire protection. These vary by neighborhood and can add hundreds to thousands per year. Check your property tax bill or the county assessor's website to see what assessments explore to your address.

Self-employment tax for California business owners

If you are self-employed in California, you owe both state income tax and federal self-employment tax. Self-employment tax covers your share of Social Security and Medicare — the portions that an employer would normally pay. In 2024, that is 15.3% of your net self-employment income (12.4% for Social Security, 2.9% for Medicare), though you can deduct half of it when calculating your income tax.

California does not have a separate self-employment tax, but you still owe the state income tax on your business profit at the regular progressive rates. You also may owe California's net business income tax if your gross income exceeds certain thresholds, though this is rare for most small businesses.

Self-employed people file Schedule C (or Schedule F for farming) with their federal return and pay estimated taxes quarterly to both the IRS and the California Franchise Tax Board. Missing quarterly payments can result in penalties, so many self-employed Californians set aside 25% to 30% of their income to cover both federal and state taxes.

Tax brackets and deductions for 2024

California's standard deduction for 2024 is $5,202 for single filers and $10,404 for married couples filing jointly. This amount is subtracted from your income before the tax rate is applied. The state also allows you to claim the federal standard deduction if it is higher, which it usually is.

Tax brackets shift upward each year to account for inflation. A single filer's first bracket in 2024 covers income up to about $10,099; in 2025 it will be slightly higher. If you earned $50,000 in 2024, you would not pay the same rate as someone earning $50,000 in 2025, because the brackets have moved. The Franchise Tax Board publishes updated brackets and deduction amounts each January.

California also allows deductions for federal income tax paid, mortgage interest, charitable donations, and other expenses, similar to the federal return. However, California does not allow deductions for state and local taxes (SALT) above $10,000 per year, a limit that was introduced federally and adopted by the state.

Who must file a California tax return

You must file a California return if your income exceeds the filing threshold for your status. For 2024, a single person with more than $20,824 in income must file; a married couple filing jointly must file if their income exceeds $41,648. These thresholds are higher than the standard deduction because they account for the deduction plus a small buffer.

Even if your income is below the threshold, filing may benefit you. If you had taxes withheld from paychecks or made estimated payments, you may be owed a refund. If you are self-employed, you must file to report your business income and pay self-employment tax, regardless of the threshold.

California residents who move out of state must file a final return for the year they left. If you worked in California for part of the year and another state for part of the year, you file part-year resident returns in both states, claiming a credit in one state for taxes paid to the other.

How to file your California taxes

Most people file their California return using tax software (like TurboTax, H&R Block, or TaxAct) or by hiring a tax professional. The state does not offer its own free filing software, but the IRS Free File program includes California returns for households earning under $79,000 in 2024. You can also read forms from the Franchise Tax Board website and file by mail.

The important date to file is April 15 (or the next business day if the 15th falls on a weekend). If you cannot file by then, you can request an automatic extension to October 15, though this extends only the filing important date, not the payment important date — taxes owed are still due April 15, or you will owe interest and penalties.

If you owe money, you can pay online through the Franchise Tax Board website, by mail, or through your tax software. If you are owed a refund, direct deposit is faster than a mailed check. The state typically issues refunds within 30 days of processing your return, though complex returns may take longer.

Frequently Asked Questions

What is the difference between California's tax rate and the federal tax rate?

California taxes your income at its own progressive rates (1% to 13.3%), separate from federal income tax (10% to 37%). You owe both. California also taxes capital gains at your regular rate, while the federal government often taxes long-term capital gains at lower rates. Sales tax and property tax are also state and local, not federal.

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

No, once you establish residency in another state, you do not owe California income tax on income earned after you move. However, you must file a part-year resident return for the year you left, reporting income earned while you were still a California resident. The state may challenge your move date if you kept property, a business, or family in California.

Why is my property tax so much higher than my neighbor's if we own the same house?

Proposition 13 reassesses property value only when it sells. If your neighbor bought decades ago, their assessed value is much lower than yours, even though the market value is the same. Your tax is based on your purchase price; theirs is based on their much older purchase price plus 2% annual increases.

Can I deduct state taxes I paid from my federal return?

You can deduct state income tax, sales tax, or property tax paid, but the total deduction is capped at $10,000 per year. Most people claim the federal standard deduction instead, which is higher than $10,000 for most filers, making the SALT cap irrelevant.

What happens if I do not file a California tax return when I owe taxes?

The Franchise Tax Board will assess penalties and interest on the unpaid amount. The penalty starts at 5% of the unpaid tax per month (up to 25% total) plus interest that compounds daily. If you owe a large amount, the state can place a lien on your property or garnish your wages. Filing late is better than not filing at all.