California taxes your income at rates between 1% and 13.3%, depending on how much you earn

California has a progressive income tax system, meaning the tax rate increases as your income rises. You do not pay one flat rate on all your income. Instead, your income is divided into brackets, and each bracket is taxed at its own rate. The lowest bracket starts at 1%, and the highest reaches 13.3% — one of the highest state income tax rates in the country.

The brackets themselves change each year because California adjusts them for inflation. This means the income ranges that fall into each bracket shift annually, even if the rates themselves stay the same. For example, the income range that triggers the 9.3% rate in 2024 will be different in 2025.

Your filing status matters: single filers, married couples filing jointly, and heads of household all have different bracket ranges. A married couple filing jointly reaches the top bracket at a higher income level than a single filer does, which is why your status affects your total tax bill.

Key Takeaways

  • California's income tax rates range from 1% to 13.3%, with rates increasing as income rises into higher brackets.
  • The income ranges for each bracket change every year due to inflation adjustments, so you cannot use last year's brackets for this year's calculation.
  • You pay tax on wages, self-employment income, investment income, and retirement distributions, but capital gains above $250,000 face an additional 1% tax on top of regular rates.
  • California taxes income earned anywhere in the state, and if you lived in California for part of the year, you owe tax only on income earned during the months you were a resident.

The 2024 Tax Brackets for California Residents

The 2024 brackets for single filers begin at 1% on income up to $10,099, then jump to 2% on income from $10,100 to $23,942. The brackets continue to climb: 4% from $23,943 to $37,788, then 6%, 8%, 9.3%, 10.3%, 11.3%, 12.3%, and finally 13.3% on income over $680,063. Each bracket applies only to the income that falls within that range, not to your entire income.

For married couples filing jointly, the brackets are roughly double the single filer ranges. For example, the 1% bracket for married couples extends to $20,198 instead of $10,099. This is why filing status changes your tax bill even when your total household income stays the same.

Heads of household have their own bracket structure, which falls between single and married filing jointly. If you are unsure which status applies to you, the IRS definition is specific: you must be unmarried, pay more than half the household expenses, and have a may have access to dependent living with you for more than half the year.

What Income Gets Taxed in California

California taxes ordinary income — wages, salaries, tips, and bonuses — at the rates above. It also taxes self-employment income, interest, dividends, and distributions from retirement accounts like IRAs and 401(k)s. If you receive unemployment benefits, those are taxable in California. Social Security benefits are not taxed by the state.

Long-term capital gains (profits from selling assets you held for more than one year) are treated differently. They are taxed as ordinary income using the brackets above, not at a separate capital gains rate like some states use. However, California added a 1% tax on long-term capital gains above $250,000 in 2023, which stacks on top of your regular income tax. This means if you sell a stock for a $500,000 gain, you pay the regular rate on the first $250,000 and an extra 1% on the remaining $250,000.

Short-term capital gains (from assets held one year or less) are taxed as ordinary income at your full marginal rate, with no special treatment.

How Residency Affects Your California Tax Bill

If you lived in California for the entire year, you owe California income tax on all income you earned, regardless of where the work happened. If you worked remotely for a company outside California but lived in the state, California still taxes that income.

If you moved to or from California during the year, you are a part-year resident. You owe tax only on income earned during the months you were a California resident. For example, if you moved out of California on June 30, you owe tax on income earned from January 1 through June 30, but not on income earned after you left. You will file Form 540-NR (Nonresident or Part-Year Resident Income Tax Return) instead of the standard Form 540.

If you never lived in California but earned income there — perhaps you worked a temporary job in the state — you owe California tax only on that California-source income. You file Form 540-NR for this situation as well.

Deductions and Credits That Lower Your California Tax

California allows a standard deduction that reduces your taxable income before tax is calculated. For 2024, the standard deduction for single filers is $5,202, and for married couples filing jointly it is $10,404. These amounts increase slightly each year. If you have large deductible expenses — mortgage interest, property taxes, charitable donations — you can itemize instead of taking the standard deduction, but you must use the same choice on both your federal and California returns.

California also offers tax credits that directly reduce the tax you owe. The Earned Income Tax Credit (EITC) is available to lower-income workers and can result in a refund even if you owe no tax. The Child and Dependent Care Credit helps offset childcare costs. The Renter's Credit provides relief to renters with low to moderate income. Unlike deductions, which reduce your taxable income, credits reduce your actual tax bill dollar-for-dollar.

If you are over 65 or blind, California offers an additional credit. If you paid tax to another state on income you also paid California tax on, you may be able to claim a credit for taxes paid to that state to avoid double taxation.

How Your Employer Withholds California Tax

When you start a job in California, you complete a Form W-4 (federal) and a Form DE 4 (California). Your employer uses these forms to calculate how much California income tax to withhold from each paycheck. The withholding is based on your filing status, the number of dependents you claim, and any additional withholding you request.

If you do not withhold enough during the year, you will owe tax when you file your return. If you withhold too much, you receive a refund. You can adjust your withholding at any time by submitting a new Form DE 4 to your employer. This is useful if your life changes — you get married, have a child, or take a second job — because these changes affect how much tax you should be paying.

If you are self-employed, you do not have an employer to withhold tax. Instead, you make estimated tax payments four times a year (quarterly) directly to the California Franchise Tax Board. These payments are due in April, June, September, and January. If you do not pay enough in estimated taxes, you may owe a penalty when you file your return, even if you ultimately paid the correct total amount.

When You File and How to Pay

California income tax returns are due on the same day as federal returns: April 15 (or the next business day if April 15 falls on a weekend). You file using Form 540 (or Form 540-NR if you are a part-year resident or nonresident). You can file electronically through the California Franchise Tax Board's website or through a tax software provider, or you can mail a paper return.

If you owe tax, you can pay when you file or set up a payment plan with the Franchise Tax Board. If you are due a refund, you can receive it by direct deposit or check. Refunds typically take 4 to 8 weeks if you file electronically, or longer if you mail a paper return.

If you cannot file by April 15, you can request an extension, but the extension applies only to filing — not to paying. Any tax you owe is still due on April 15, and you will owe interest and penalties on unpaid amounts after that date.

Frequently Asked Questions

Do I have to pay California income tax if I work remotely for an out-of-state company?

Yes, if you live in California. The state taxes income earned by California residents regardless of where the employer is located or where the work is performed. If you moved out of California mid-year, you owe tax only on income earned while you were a resident.

Is Social Security taxed by California?

No. California does not tax Social Security benefits. However, if you have other income above certain thresholds, some of your Social Security may become taxable at the federal level, which is separate from California tax.

What is the difference between the 1% capital gains tax and my regular income tax rate?

The 1% tax applies only to long-term capital gains above $250,000 and is in addition to your regular income tax. For example, if you are in the 9.3% bracket and sell an asset for a $500,000 gain, you pay 9.3% on the first $250,000 and 10.3% (9.3% plus 1%) on the remaining $250,000.

Can I claim the standard deduction on my California return if I itemize on my federal return?

No. California requires you to use the same deduction method — standard or itemized — on both your federal and state returns. If you itemize on your federal return, you must itemize on your California return as well.

What happens if I do not pay my estimated taxes on time?

You will owe interest and penalties on the unpaid amount, even if you pay the full tax bill when you file your return. The penalty is calculated based on how late the payment was and how much was owed. You can avoid penalties by paying at least 90% of your current year tax or 100% of your prior year tax through estimated payments.