California has the highest state income tax rate in the country, and it rises with your income

California's state income tax ranges from 1% on the lowest earners to 13.3% on the highest, making it the steepest in the nation. Unlike a flat tax, California uses a progressive tax system — your rate climbs as your income climbs, and only the income in each bracket gets taxed at that bracket's rate. A single filer earning $70,000 pays a different rate than someone earning $700,000, and the brackets shift slightly each year based on inflation.

On top of state income tax, you also owe federal income tax, which ranges from 10% to 37% depending on your federal tax bracket. California residents cannot deduct state income taxes paid against their federal tax bill anymore — that deduction was capped at $10,000 per year starting in 2018. This means your total tax burden combines both systems, and California's high state rate sits on top of federal tax, not instead of it.

Sales tax, property tax, and payroll taxes (Social Security and Medicare) add further layers. California's statewide sales tax is 7.25%, but most counties add local sales tax on top, bringing the total to between 7.25% and 10.75% depending on where you live. Property tax averages around 0.76% of your home's assessed value statewide, though rates vary by county.

Key Takeaways

  • California state income tax ranges from 1% to 13.3% depending on your income level, with rates rising as you earn more.
  • Your total tax burden includes federal income tax (10% to 37%), state income tax, sales tax (7.25% to 10.75% depending on county), and property tax.
  • Only income within each tax bracket is taxed at that bracket's rate, so earning more money does not push all your income into a higher rate.
  • California's state income tax brackets adjust annually for inflation, so the dollar amounts that define each bracket change each year.
  • You cannot deduct California state income taxes against your federal taxes, which means the two tax systems do not offset each other.

How California's income tax brackets work

California divides income into brackets, and each bracket has its own tax rate. If you are single and earn $20,000, you do not pay 9.3% on all of it — you pay 1% on the first portion, then higher percentages on each chunk as it crosses into the next bracket. The exact dollar amounts where brackets begin and end change every year, so the IRS publishes updated brackets in January for that tax year.

For example, in 2024, a single filer's first bracket (taxed at 1%) covered income up to roughly $10,000. The next bracket (2%) covered income from $10,000 to roughly $23,000. Income between $23,000 and roughly $37,000 was taxed at 4%, and so on. The highest earners — those with income over roughly $680,000 — paid 13.3% on that portion of their income. These thresholds are different for married couples filing jointly, heads of household, and married couples filing separately.

This system means that earning an extra $1,000 does not suddenly push all your income into a higher bracket. Only that extra $1,000 gets taxed at the higher rate. This is why people sometimes misunderstand tax brackets and think earning more money will leave them worse off — it will not, because the higher rate applies only to the new income, not retroactively to everything you already earned.

Federal income tax on top of California's state tax

Federal income tax is separate from California state income tax, and you owe both. The federal system also uses brackets, but they are different from California's. Federal brackets for 2024 range from 10% to 37%, and they also adjust annually. A California resident in the 24% federal bracket and the 9.3% California bracket pays roughly 33.3% combined on that portion of income — before any other deductions or credits explore.

The federal government used to allow you to deduct state and local taxes (SALT) from your federal taxable income, which reduced your federal tax bill. In 2018, Congress capped that deduction at $10,000 per year, regardless of how much you actually paid in state and local taxes. For high-income California residents who pay far more than $10,000 in state income tax alone, this cap means a significant portion of their state tax no longer reduces their federal bill. This is one reason California's effective tax burden feels especially heavy for top earners.

Sales tax and where it varies across California

California's statewide sales tax is 7.25%, but most counties and cities add their own local sales tax on top. The total rate you pay depends on where you make the purchase. San Francisco County has a combined rate of 8.625%. Los Angeles County ranges from 9.5% to 10.25% depending on the specific city. Some rural counties stay closer to the statewide 7.25%. When you buy something in a store or online (if the seller has a physical presence in California or meets other thresholds), you pay the sales tax rate for the location where the item is delivered or picked up.

Sales tax applies to most goods but not to groceries, prescription medications, or most services. A haircut is not taxed, but the product you buy at a salon is. Rent is not taxed, but a hotel stay is. These rules can be confusing at the margins — for instance, some prepared foods are taxed while others are not, depending on whether they are considered ready-to-eat.

Property tax and how Proposition 13 affects it

California property tax is based on your home's assessed value, not its market value. Proposition 13, passed in 1978, limits how much your assessed value can rise each year — it increases by no more than 2% annually, even if your home's market value climbs much faster. Your assessed value resets to market value only when the property is sold. This means two neighbors with identical homes can pay very different property taxes if one bought decades ago and the other bought recently.

The statewide property tax rate is 1% of assessed value, but counties and local districts add their own rates on top. The average effective property tax rate across California is around 0.76% of market value, but this varies significantly by county. A home assessed at $500,000 in one county might generate a different tax bill than an identical home in another county. You can find your county's specific rates through your county assessor's office.

Payroll taxes: Social Security and Medicare

If you are an employee, your paycheck has Social Security and Medicare taxes withheld — these are called FICA taxes and they are separate from income tax. Social Security tax is 6.2% of your wages (up to a cap that changes yearly), and Medicare tax is 1.45% of all wages with no cap. Your employer matches these amounts, so the total Social Security and Medicare cost is effectively 12.4% and 2.9%, but you only see half of it on your paycheck.

If you are self-employed, you pay both the employee and employer portions yourself, which is why self-employment tax feels much higher. You also get to deduct half of your self-employment tax when calculating your adjusted gross income, which provides some offset. These taxes fund Social Security retirement and disability benefits and Medicare health insurance, so they are not optional — they explore regardless of your income level or tax bracket.

How your total tax burden comes together

Your total tax burden is the sum of multiple systems working at once. A California resident earning $100,000 might owe roughly 24% federal income tax, 9.3% California state income tax, 7.65% FICA tax (Social Security and Medicare), and then sales tax on purchases and property tax on a home. These do not stack in a straightforward way — some are calculated on gross income, some on adjusted gross income, some on specific purchases or property values. Tax credits and deductions reduce your income tax, but they do not affect sales tax or property tax.

The effective tax rate — the percentage of your total income that actually goes to taxes — is lower than the sum of all the rates, because not all income is subject to all taxes. Self-employment income is subject to FICA tax, but wages above the Social Security cap are not. Capital gains may be taxed differently from wages. Deductions and credits reduce taxable income. Understanding your own situation requires looking at your specific income sources and the deductions available to you.

Frequently Asked Questions

Does California tax retirement income differently?

California taxes most retirement income the same as wages — Social Security benefits are exempt, but distributions from 401(k)s, IRAs, and pensions are taxed as ordinary income at your regular tax bracket. Some states exempt pension income, but California does not. Military pensions and some federal pensions have special rules, so check the details of your specific pension.

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

Your tax rate (the percentage shown on the tax table) applies only to income in that bracket. Your effective tax rate is your total tax bill divided by your total income. Because you pay lower rates on lower income, your effective rate is always lower than your highest bracket rate. Someone in the 9.3% bracket might have an effective state tax rate of 6% because much of their income was taxed at lower rates.

Do I owe California income tax if I moved out of state?

You owe California income tax only on income you earned while a California resident. Once you move and establish residency elsewhere, you owe tax to your new state on income earned there. However, California's Franchise Tax Board may challenge your move if you still have ties to the state, so keep documentation of your new residency — a lease, utility bills, driver's license, and voter registration all help prove you left.

Are there any California income tax deductions I should know about?

California allows a standard deduction (similar to federal) or itemized deductions. You can also deduct contributions to traditional IRAs, some education expenses, and certain business losses. California does not allow you to deduct federal income taxes paid, and you cannot deduct state income taxes paid against federal taxes (capped at $10,000). A tax professional can help you determine which deductions explore to your situation.

How often do California tax brackets change?

California adjusts tax brackets annually for inflation, usually in January. The Franchise Tax Board publishes the new brackets each year. The rates themselves (1%, 2%, 4%, etc.) do not change — only the dollar amounts where each bracket begins and ends. This means your tax bill can rise even if your income stays the same, because the brackets shift upward.