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

California has a progressive income tax system, meaning the percentage you pay increases as your income rises. The lowest bracket starts at 1% for single filers earning under $10,000 per year. The highest bracket — 13.3% — applies to single filers earning over $680,000. If you're married filing jointly, the income thresholds are roughly double.

These are state rates only and do not include federal income tax, which is separate. Your actual tax bill depends on which bracket your total income falls into, not your entire income at the highest rate. California also taxes capital gains, interest, and dividends as ordinary income.

The state adjusts these brackets yearly for inflation, so the dollar amounts change but the percentage structure stays the same. You can find the current year's brackets on the California Franchise Tax Board website.

Key Takeaways

  • California income tax ranges from 1% to 13.3% depending on your income level, with higher earners paying a larger percentage.
  • Sales tax in California is 7.25% statewide, but local taxes can raise the total to 8.5% or higher depending on your county and city.
  • Property tax is capped at 1% of the assessed home value in most cases, though you may owe additional assessments for schools or local services.
  • Self-employed workers pay both the employee and employer portion of Social Security and Medicare taxes, which is roughly 15.3% combined.
  • Tax brackets and rates change yearly, so your percentage may shift even if your income stays the same.

Sales tax varies by location, from 7.25% to over 10% depending on your county

California's base sales tax is 7.25%, but most counties and cities add their own local sales taxes on top. The total you pay at checkout depends on where you live. In Los Angeles County, for example, the combined rate is 9.5%. In San Francisco, it's 8.625%. Some areas in the Central Valley exceed 10%.

These local taxes fund schools, transit, and other services specific to your region. When you buy something online from an out-of-state seller, you may owe use tax — essentially sales tax on the purchase — though enforcement varies. Most major retailers now collect California sales tax on online orders.

Groceries, prescription medications, and some medical equipment are exempt from sales tax in California. Prepared food, alcohol, and gasoline are taxed at the full rate.

Property tax is usually 1% of your home's assessed value, plus voter-approved additions

California property tax is capped at 1% of the assessed value under Proposition 13, passed in 1978. If your home is assessed at $500,000, your base property tax would be $5,000 per year. However, your actual bill is usually higher because of local assessments voters have approved for schools, fire districts, water agencies, and other services.

When you buy a home, the county assessor sets the assessed value based on the sale price. That value increases by up to 2% per year regardless of market changes, until the property sells again. This means two identical homes on the same street can have very different tax bills if one sold years ago and one sold recently.

You receive a property tax bill once or twice per year from your county assessor. If you believe the assessed value is wrong, you can file an appeal, usually within 30 days of receiving the bill.

Self-employed workers owe self-employment tax on top of income tax

If you're self-employed, you pay both the employee and employer portion of Social Security and Medicare taxes. This is called self-employment tax and totals roughly 15.3% of your net business income (12.4% for Social Security, 2.9% for Medicare). Employees pay only half because their employer covers the other half; self-employed people pay both.

You report self-employment tax on Schedule SE when you file your federal return. California does not have a separate self-employment tax, but you still owe California income tax on your business income at the regular rates.

You can deduct half of your self-employment tax when calculating your adjusted gross income, which lowers your overall tax burden slightly. Many self-employed people set aside 25% to 30% of their income for taxes to avoid a large bill at filing time.

Payroll taxes for employees are withheld automatically from your paycheck

If you're an employee, your employer withholds federal income tax, Social Security tax (6.2%), and Medicare tax (2.9%) from each paycheck. California does not have a separate state payroll tax — your state income tax is withheld based on the W-4 form you fill out when hired.

The amount withheld depends on your income, filing status, and the number of dependents you claim. If too much is withheld, you get a refund when you file your return. If too little is withheld, you owe money. You can adjust your withholding by submitting a new W-4 to your employer at any time.

Tax brackets shift yearly, so your rate may change even if your income doesn't

California adjusts income tax brackets each year for inflation. This means the dollar amounts where each tax rate begins change, but the percentages themselves stay the same. If you earned $50,000 last year and $50,000 this year, your tax rate might be different because the brackets moved.

The Franchise Tax Board publishes updated brackets in the spring for the current tax year. You can find them on the FTB website or in the instructions that come with your tax forms. Some people use tax software that automatically applies the current year's brackets.

Special taxes and fees you may encounter

California has several smaller taxes beyond income, sales, and property. Vehicle registration fees are based on your car's value and can range from $150 to $400 or more per year. Gasoline tax is roughly 68 cents per gallon (state and federal combined). Alcohol purchases are taxed at the regular sales tax rate plus an excise tax.

If you own a business, you may owe a gross receipts tax or licensing fee depending on your city and industry. Some counties charge documentary transfer taxes when you buy or sell real estate. These vary widely by location, so check with your county assessor or city clerk for specifics.

Frequently Asked Questions

What is California's highest income tax rate?

California's highest income tax rate is 13.3%, which applies to single filers earning over $680,000 per year. This is one of the highest state income tax rates in the country. The rate applies only to income above that threshold, not your entire income.

Do I owe California income tax if I live out of state but work in California?

Yes, California taxes income earned within the state regardless of where you live. If you work in California but live in another state, you owe California income tax on your California wages. You may also owe taxes to your home state, though some states have reciprocal agreements to avoid double taxation.

Is Social Security income taxed in California?

California does not tax Social Security benefits. However, the federal government may tax your benefits if your total income exceeds certain thresholds. Check the IRS website or speak with a tax preparer about your specific situation.

Can I deduct property taxes on my federal return?

Yes, you can deduct up to $10,000 in state and local taxes (including property tax) on your federal return if you itemize deductions. This limit applies to all state and local taxes combined — income, sales, and property. Most people use the standard deduction instead, which is higher for most filers.

What happens if I don't pay my California taxes?

The Franchise Tax Board can place a lien on your property, garnish your wages, or intercept your tax refunds. Penalties and interest accrue on unpaid taxes. If you owe and cannot pay in full, you can request a payment plan or offer in compromise through the FTB website.