California's tax rates depend on your income level and filing status

California has a progressive income tax system, meaning the tax rate increases as your income rises. The state does not have a single flat tax percentage. Instead, you pay different rates on different portions of your income, with rates ranging from 1% on the lowest bracket to 13.3% on the highest. Your actual tax bill depends on where your total income falls within these brackets and whether you file as single, married filing jointly, head of household, or another status.

The brackets themselves change each year based on inflation adjustments. The Franchise Tax Board (FTB) publishes updated brackets annually, usually in the fall for the following tax year. This means the income threshold that triggers a higher rate shifts year to year, even if the rate percentages stay the same.

Key Takeaways

  • California's income tax rates range from 1% to 13.3%, applied progressively to different portions of your income based on your filing status.
  • Tax brackets adjust annually for inflation, so the income level at which you enter a higher bracket changes each year.
  • The 13.3% top rate applies only to high earners and includes a 1% Mental Health Tax on income over $1 million.
  • You can find your specific bracket and tax estimate by using the FTB tax calculator or consulting your tax return from the prior year.
  • Self-employed Californians owe both income tax and self-employment tax, which is separate from the state income tax percentage.

How California's progressive tax brackets work

In a progressive system, you do not pay one rate on all your income. Instead, your income is divided into brackets, and each bracket is taxed at its own rate. For example, if you are single and earn $75,000, you might pay 1% on the first $10,000, then 2% on the next portion, and so on, until you reach the bracket that covers your $75,000. You do not jump to a higher rate on your entire income just because you crossed into a higher bracket.

This is why knowing your filing status matters. A single filer, a married couple filing jointly, and a head of household all have different bracket thresholds. A married couple's income can be higher before entering the same rate bracket as a single person. The FTB website lists the current-year brackets for each filing status, and you can also find them in the instructions that come with Form 540, California's resident income tax return.

The 13.3% top rate and the Mental Health Tax

California's highest marginal rate is 13.3%, but it is not a single tax. The rate consists of the regular top income tax rate of 12.3%, plus a 1% Mental Health Tax that applies only to income over $1 million. This Mental Health Tax was added in 2004 and funds mental health and substance abuse services. It applies to all income types—wages, self-employment income, capital gains, and other sources—once your total income exceeds $1 million.

If your income is below $1 million, you will not owe this additional 1%. The regular top bracket rate of 12.3% is the highest you will pay. The Mental Health Tax is a separate calculation, not part of the standard progressive brackets, which is why it appears as an additional percentage on high-income returns.

Tax brackets for the current year

California's tax brackets change annually. For the 2024 tax year (filed in 2025), the brackets for single filers start at 1% and increase through 9.3% at the regular top bracket, with the additional 1% Mental Health Tax kicking in at $1 million. Married filing jointly brackets are roughly double the single thresholds, and head of household brackets fall between the two.

Rather than listing specific dollar amounts here—which would be outdated within months—you should check the FTB's official tax rate schedules on their website or in the Form 540 instructions for the year you are filing. The FTB updates these each year, usually by September. You can also use the FTB's online tax calculator, which automatically applies the current year's brackets to your income estimate.

How your filing status affects your tax rate

Your filing status determines which bracket thresholds explore to you. Married couples filing jointly typically have the widest brackets, meaning more income fits into lower rates before moving to higher ones. Single filers have narrower brackets. Head of household filers fall in between. If you are married but file separately, your brackets are even narrower than single filers, which is why married filing separately is rarely the best choice from a tax standpoint.

Choosing the correct filing status is one of the first decisions on your return. If your status changed during the year—you married, divorced, or a spouse died—you may have options for which status to use. The FTB instructions explain which status applies to your situation, and a tax professional can help if your circumstances are complex.

Self-employment income and California taxes

If you are self-employed, you owe California income tax on your net self-employment income, calculated using the same brackets as any other income. However, self-employment income is also subject to federal self-employment tax (Social Security and Medicare), which is separate from California income tax. California does not impose its own self-employment tax, but you still owe the federal version.

When you file your California return, you report your net self-employment income (gross income minus business expenses) and pay California income tax on it at the applicable rate for your bracket. You also file Schedule SE with your federal return to calculate self-employment tax. Some self-employed people can deduct half of their self-employment tax when calculating federal taxable income, but this does not reduce your California income tax.

Capital gains and the top tax rate

California taxes capital gains—profits from selling stocks, real estate, or other investments—as ordinary income. This means capital gains are subject to the same progressive brackets as wages and self-employment income. If you have a large capital gain in a single year, it can push you into a higher bracket for that year only, which is why timing the sale of investments can sometimes affect your overall tax bill.

Unlike some states, California does not offer a preferential rate for long-term capital gains. Whether you held an investment for one year or twenty years, the gain is taxed at your marginal rate. This is an important difference from federal tax, where long-term capital gains receive preferential rates. When planning a large sale, consider consulting a tax professional about the timing and structure to understand the full California and federal tax impact.

Frequently Asked Questions

What is California's average tax rate versus my marginal rate?

Your marginal rate is the percentage you pay on your last dollar of income—the highest bracket you fall into. Your average rate is your total tax divided by your total income, which is always lower. If you earn $100,000 and owe $8,000 in California income tax, your average rate is 8%, even though your marginal rate might be 9.3%. When planning deductions or income timing, focus on your marginal rate, because that is the rate at which additional income or deductions matter.

Do I owe California income tax if I work for a company outside California?

If you are a California resident, you owe California income tax on income from all sources, regardless of where the employer is located. If you are a non-resident who worked in California during the year, you owe tax only on income earned in California. Your residency status and the location where you performed the work determine what you owe. The FTB Form 540-NR is for non-residents and part-year residents.

Can I reduce my California tax rate by bunching deductions into one year?

Bunching deductions into a single year does not change your tax rate—it reduces your taxable income, which may move you into a lower bracket. For example, if you bunch charitable donations and property taxes into one year, your taxable income drops, and you may pay tax at a lower marginal rate on that income. This strategy works best if you are close to a bracket threshold and can control the timing of deductions.

Does California tax retirement income differently?

Social Security benefits are not taxed by California. Distributions from traditional IRAs, 401(k)s, and pensions are taxed as ordinary income at your marginal rate. Roth IRA distributions are not taxed. Military and some government pensions receive preferential treatment under California law and may be partially or fully excluded from taxable income. Check the FTB instructions or consult a tax professional if you receive a government pension.

What if I move out of California mid-year?

You are a part-year resident if you moved into or out of California during the tax year. You owe California tax only on income earned while you were a resident. You file Form 540-NR and report your residency dates. The FTB uses specific rules to determine your residency status, including where you maintained a home and where your family lived. If you moved for work, keep documentation of your move date and new address to support your part-year resident claim.