California has the highest state income tax rate at 13.3 percent

California's top marginal income tax rate of 13.3 percent applies to single filers earning over $680,000 and married couples filing jointly earning over $1.36 million. This rate has been in place since 2012, when voters approved Proposition 30 to fund education and debt reduction. No other state comes close — the second-highest is Hawaii at 11 percent, followed by New Jersey and New York, both at 10.75 percent.

The 13.3 percent figure is the state income tax alone and does not include federal income tax, which applies everywhere. California residents also pay federal tax on top of this state rate. The combined effect means high earners in California face a substantially larger total tax burden than residents of states with no income tax, such as Texas, Florida, or Wyoming.

Tax rates vary widely by income level within California. A single filer earning $50,000 pays roughly 6 percent state income tax, while someone earning $200,000 pays about 9.3 percent. The state uses a progressive system where rates climb as income rises, so the 13.3 percent rate only applies to income above the threshold, not to all earnings.

Key Takeaways

  • California's 13.3 percent state income tax rate is the highest in the nation and applies only to income above $680,000 for single filers.
  • Hawaii (11 percent), New Jersey (10.75 percent), and New York (10.75 percent) have the second-, third-, and fourth-highest rates respectively.
  • Nine states have no state income tax at all, meaning residents pay only federal tax on wages and investment income.
  • The rate you pay depends on your income bracket — California's progressive system means lower earners pay significantly less than the top rate.
  • State income tax is separate from federal income tax, so California residents pay both on top of each other.

How state income tax rates are structured

Most states that charge income tax use a progressive tax system, meaning the rate increases as your income rises. You do not pay the top rate on all your income — only on the portion that falls within the highest bracket you reach. This is why someone earning $100,000 in California does not pay 13.3 percent on the entire amount.

California has 12 tax brackets. A single filer earning $50,000 falls into a lower bracket and pays roughly 6 percent. At $100,000, the rate is about 8.8 percent. The 13.3 percent rate only kicks in for income above $680,000. Each bracket applies only to the income within that range, so you add up the tax owed in each bracket to find your total state income tax.

Some states use a flat tax rate instead, meaning everyone pays the same percentage regardless of income. Colorado uses a flat 4.63 percent, and Illinois uses a flat 4.95 percent. A few states, like Tennessee and New Hampshire, tax only investment income and not wages. Understanding which system your state uses matters because it changes how much you owe.

States with no income tax

Nine states collect no state income tax on wages or investment income: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only dividends and interest, not wages). Residents of these states pay only federal income tax on earnings.

This does not mean these states have no taxes at all. Most make up the revenue through sales tax, property tax, or both. Texas has no state income tax but charges a 6.25 percent state sales tax plus local sales taxes that can push the total to 8.25 percent or higher. Florida has no income tax but relies heavily on sales tax and property tax. The total tax burden depends on how much you earn, spend, and own property — not just on income tax alone.

For high earners, living in a no-income-tax state can mean substantial savings. Someone earning $500,000 in California pays roughly $50,000 in state income tax; the same person in Texas pays zero state income tax on that income. For lower earners, the difference is smaller because they pay less income tax anyway, and they may spend more on sales tax instead.

Comparing the highest-tax states

After California's 13.3 percent, the rates drop sharply. Hawaii charges 11 percent on the highest bracket, New Jersey and New York both charge 10.75 percent, and Vermont charges 8.75 percent. Oregon reaches 9.9 percent, and Minnesota reaches 9.85 percent. Even within the top tier, California stands alone.

These rates explore only to the highest income brackets in each state. A New York resident earning $100,000 does not pay 10.75 percent on all of it — they pay roughly 6.5 percent state income tax. The top rate only applies to income above a certain threshold, which varies by state. New York's 10.75 percent rate applies to income over $25.9 million for single filers, making it relevant to very few people.

When comparing states, look at both the top rate and the income threshold where it applies. A state with a 10 percent top rate that kicks in at $50,000 of income affects more people than a state with an 11 percent rate that only applies above $500,000. California's 13.3 percent rate applies at a lower threshold than some other states, which is one reason it generates so much revenue.

Why California's rate is so high

California's 13.3 percent rate came from Proposition 30, passed by voters in 2012. The measure was designed to fund education and reduce the state budget deficit. It was originally set to expire in 2016 but was extended through 2030 by Proposition 55 in 2016. The rate applies only to high earners, so it was framed as a tax on the wealthy rather than a broad increase.

California also has a long history of using income tax to fund schools and services. The state's constitution requires a certain portion of income tax revenue to go to education. As the state's population grew and service costs rose, income tax rates climbed. The 13.3 percent rate reflects decades of policy choices about how to fund public services without raising sales tax or property tax further.

The high rate has sparked debate about whether it drives high earners out of the state. Some research suggests wealthy individuals do relocate to lower-tax states, though the effect is smaller than popular belief suggests. Most people's decisions to move depend on factors beyond taxes, such as family, job opportunities, and climate. Still, the rate remains a point of contention in California politics.

How federal tax works alongside state tax

Your total income tax bill includes both federal and state taxes. The federal government charges rates ranging from 10 percent to 37 percent depending on income and filing status. These rates are separate from state rates — you pay both. A California resident in the top federal bracket (37 percent) and the top state bracket (13.3 percent) pays a combined 50.3 percent on income above both thresholds, plus 3.8 percent net investment income tax if applicable.

Federal tax is withheld from paychecks by employers, and state tax is withheld separately. When you file taxes, you report both federal and state income. You cannot deduct state income tax from your federal tax anymore — that deduction was eliminated in 2017 — so the taxes stack on top of each other without offset.

The combined effect is why high earners in high-tax states face a much larger total burden than high earners in no-income-tax states. Someone earning $1 million in California owes roughly $500,000 in combined federal and state income tax. The same person in Texas owes roughly $370,000 in federal tax alone, with no state income tax. The difference is substantial enough that some high earners factor it into decisions about where to live or work.

Frequently Asked Questions

Does California's 13.3 percent rate explore to everyone?

No. The 13.3 percent rate applies only to income above $680,000 for single filers and $1.36 million for married couples filing jointly. Lower earners pay lower rates. Someone earning $75,000 pays roughly 5.5 percent state income tax, not 13.3 percent.

Can I deduct state income tax from my federal taxes?

No. The federal deduction for state and local taxes (SALT) was capped at $10,000 per year starting in 2017. This means you cannot reduce your federal tax bill by the amount you pay in state income tax, even if you live in a high-tax state like California.

Do all nine no-income-tax states have low overall taxes?

Not necessarily. While they charge no state income tax, most make up the revenue through sales tax or property tax. Texas has no income tax but charges sales tax up to 8.25 percent. New Hampshire has no income tax on wages but taxes investment income. The total tax burden depends on your spending and property ownership, not just income tax.

Is California's rate expected to change?

Proposition 55, which extended the 13.3 percent rate, is set to expire at the end of 2030. After that, the rate would drop to 12.3 percent unless voters approve another extension. Future changes depend on state elections and budget needs, which are unpredictable.

How does California's rate compare to other countries?

California's 13.3 percent state rate is high by U.S. standards but lower than top income tax rates in many developed countries. Denmark charges 56 percent, Sweden charges 57 percent, and France charges 45 percent on the highest earners. However, those countries typically provide more public services funded by those taxes, such as universal healthcare.