California State Tax Rates
California's tax and revenue system isn't fair for all Californians. People with the lowest incomes pay a disproportionate share of state and local sales taxes, which are regressive.
California’s state income tax rate is 13.3%, one of the country’s highest. These rates apply to adjusted gross income, which is your total income after subtracting all deductions and exemptions. These taxes are regressive, meaning they take a bigger share of low-income families’ budgets. They also tend to spike during boom-and-bust periods, as they did during the Great Recession when stock market gains fuelled capital-gains taxes that helped support state programs. California’s state base percentage rate is 6 percent, and the local and district rates vary. The city and county rates may be as low as 0.15 percent. There are also district transaction taxes, which is an additional local sales tax that can be up to 3 percent on certain types of transactions. These are voted on by local residents.
Some high-volume sellers in California are required to file and pay sales tax monthly rather than quarterly. The state’s tax and revenue system has a major impact on the ability of households to care for their families, build strong communities, and contribute to a thriving economy. It is crucial that policymakers make sure the system raises enough money to support all Californians equitably. This fact sheet provides an overview of key concepts and illustrates how a variety of policies can further or impede equity for Californians by income, wealth, race/ethnicity, gender, and family structure.
| Tax Type | Tax Rate |
|---|---|
| California Income Tax | 1% – 12.3% (depending on income bracket) |
| California Sales and Use Tax | 7.25% + 0.10% – 1.00% (local district rates) |
| California Estate Tax | 40% |
| California Gift Tax | 16% |
California Tax News
The California income tax is a progressive state tax, with rates that increase as taxable income increases. It also features a standard deduction, personal exemptions, and dependant deductions. The California income tax is similar to the Federal income tax, though it may have different rules and rates. The new law will fund an expansion of the state’s paid family leave and disability programs, raising the wage replacement rate for low-wage workers from 70% to 90% of their regular wages during their leaves. The measure has support from labor unions, affordable housing groups, and dozens of cities and counties.
In other news, the FTB has announced that taxpayers in California impacted by recent natural disasters will have an extended deadline to file their 2022 taxes. The IRS has granted similar deadline extensions to people in Hawaii, Louisiana, and other states impacted by Hurricanes Idalia and Lee, wildfires, and seawater intrusion. California typically conforms to these IRS deadline extensions. Those with tax returns or quarterly estimated payments due in 2022 can now file by Nov. 16. The extension also applies to contributions to IRAs and health savings accounts.
