This article is not intended to provide tax, legal, or investment advice. This material has been prepared for informational purposes only, and should not be relied upon for tax, legal, or investment purposes. These topics are complex and constantly changing. The information presented here may be incomplete or out of date. Be sure to consult a relevant professional.
California has some of the highest taxes within the US. The base sales tax rate is 7.25% which is higher than in any other state. California’s top marginal income tax rate, 13.3%, is the highest in the United States.
Moreover, the average homeowner pays around 0.73% of their actual home value as a real estate tax annually. California income taxes vary depending on the taxpayer’s income. If a taxpayer owns less than $61,214 annually, then the marginal rate in California is 8%.
If you need help with taking care of personal or business tax returns, then consider using the help of a highly qualified CPA from an accounting company. The company offers the services of accountants who ensure filing taxes in California according to all the rules.
Key takeaways:
- Income tax: 1% – 13.3% (progressive tax).
- Sales tax: 7.25% – 10.75% (depends on the county).
- Property tax: 0.73% average effective rate
- Gas tax: 51.10 cents per gallon of gasoline, 38.90 cents per gallon of diesel.
Note: there is no specific estate tax in California. More details on estate taxes in California are described further in the article.
California Income Taxes
California also has a progressive income tax, and there are no flat income rates. Progressive tax means that the more a person earns, the more they have to pay in taxes. The state rate works just like the federal income one, but it’s always lower.
California has ten income tax brackets from 1% up to 13.3%. Technically, the last tax bracket is 12.3%, but there is also an additional 1% for those with a personal income over $1 million.
The income tax in California is a part of the Mental Health Services Act. Funds of taxpayers finance health programs in the state. The fee of 13.3% is the highest in the US but is applied only to taxpayers with a personal income over $1 million.
Check out the table below to learn about tax in California.
| Single filers | Married, filing jointly | Married, filing separately | Head of household | Rate |
| $0 – $18,663 | $0 – $18,650 | $0 – $9,325 | $0 – $18,663 | 1.00% |
| $18,663 – $44,217 | $18,650 – $44,214 | $9,325 – $22,107 | $18,663 – $44,217 | 2.00% |
| $44,217 – $56,999 | $44,214 – $69,784 | $22,107 – $34,892 | $44,217 – $56,999 | 4.00% |
| $56,999 – $70,542 | $69,784 – $96,870 | $34,892 – $48,435 | $56,999 – $70,542 | 6.00% |
| $70,542 – $83,324 | $96,870 – $122,428 | $48,435 – $61,214 | $70,542 – $83,324 | 8.00% |
| $83,324 – $425,251 | $122,428 – $625,372 | $61,214 – $312,686 | $83,324 – $425,251 | 9.30% |
| $425,251 – $510,303 | $625,372 – $750,442 | $312,686 – $375,221 | $425,251 – $510,303 | 10.30% |
| $510,303 – $850,503 | $750,442 – $1,250,738 | $375,221 – $625,369 | $510,303 – $850,503 | 11.30% |
| $850,503 – $1,000,000 | $1,250,738 – $2,000,000 | $625,369 – $1,000,000 | $850,503 – $1,000,000 | 12.30% |
| $1,000,000+ | $2,000,000+ | $1,000,000+ | $1,000,000+ | 13.30% |
Note: taxpayers apply mentioned rates to the adjusted gross income. It’s the type of income when a taxpayer claims all deductions and credits. A standard credit in the state is $4,803 for single filers and $9,606 for joint filers.
It’s recommended that taxpayers in the state should check out all tax credits and deductions they may claim. Here are a few examples of credits:
- childcare;
- credits on buying an electric vehicle;
- credits on installing solar panels.
San Francisco collects a gross receipts tax on big businesses’ payroll expenses. You pay this tax only if owning a big company.
California Sales Tax
Another highest rate in the country is the sales one – 7.25. Regardless of the taxpayer’s location in the state, they pay an additional 7.25 of the purchase price of any taxable product. Moreover, each county and city also has their additional tax.
Check out the table below to learn about taxation in counties and cities (and totals) in California.
| County sales tax rate | |||
| County | State, % | County, % | Total sales tax, % |
| Alameda | 7.25 | 3.00 | 10.25 |
| Alpine | 7.25 | 0.00 | 7.250 |
| Amador | 7.25 | 0.50 | 7.750 |
| Butte | 7.25 | 0.00 | 7.250 |
| Calaveras | 7.25 | 0.00 | 7.250 |
| Colusa | 7.25 | 0.00 | 7.250 |
| Contra Costa | 7.25 | 1.50 | 8.750 |
| Del Norte | 7.25 | 1.25 | 8.500 |
| El Dorado | 7.25 | 0.00 | 7.250 |
| Fresno | 7.25 | 0.73 | 7.975 |
| Glenn | 7.25 | 0.00 | 7.250 |
| Humboldt | 7.25 | 0.50 | 7.750 |
| Imperial | 7.25 | 0.50 | 7.750 |
| Inyo | 7.25 | 0.50 | 7.750 |
| Kern | 7.25 | 0.00 | 7.250 |
| Kings | 7.25 | 0.00 | 7.250 |
| Lake | 7.25 | 0.00 | 7.250 |
| Lassen | 7.25 | 0.00 | 7.250 |
| Los Angeles | 7.25 | 2.25 | 9.500 |
| Madera | 7.25 | 0.50 | 7.750 |
| Marin | 7.25 | 1.00 | 8.250 |
| Mariposa | 7.25 | 0.50 | 7.750 |
| Mendocino | 7.25 | 0.63 | 7.875 |
| Merced | 7.25 | 0.50 | 7.750 |
| Modoc | 7.25 | 0.00 | 7.250 |
| Mono | 7.25 | 0.00 | 7.250 |
| Monterey | 7.25 | 0.50 | 7.750 |
| Napa | 7.25 | 0.50 | 7.750 |
| Nevada | 7.25 | 0.25 | 7.500 |
| Orange | 7.25 | 0.50 | 7.750 |
| Placer | 7.25 | 0.00 | 7.250 |
| Plumas | 7.25 | 0.00 | 7.25 |
| Riverside | 7.25 | 0.50 | 7.75 |
| Sacramento | 7.25 | 0.50 | 7.75 |
| San Benito | 7.25 | 1.00 | 8.25 |
| San Bernardino | 7.25 | 0.50 | 7.75 |
| San Diego | 7.25 | 0.50 | 7.75 |
| San Francisco | 7.25 | 1.38 | 8.63 |
| San Joaquin | 7.25 | 0.50 | 7.75 |
| San Luis Obispo | 7.25 | 0.00 | 7.25 |
| San Mateo | 7.25 | 2.13 | 9.38 |
| Santa Barbara | 7.25 | 0.50 | 7.75 |
| Santa Clara | 7.25 | 1.88 | 9.13 |
| Santa Cruz | 7.25 | 1.75 | 9.00 |
| Shasta | 7.25 | 0.00 | 7.25 |
| Sierra | 7.25 | 0.00 | 7.25 |
| Siskiyou | 7.25 | 0.00 | 7.25 |
| Solano | 7.25 | 0.13 | 7.38 |
| Sonoma | 7.25 | 1.25 | 8.50 |
| Stanislaus | 7.25 | 0.63 | 7.88 |
| Sutter | 7.25 | 0.00 | 7.25 |
| Tehama | 7.25 | 0.00 | 7.25 |
| Trinity | 7.25 | 0.00 | 7.25 |
| Tulare | 7.25 | 0.50 | 7.75 |
| Tuolumne | 7.25 | 0.00 | 7.25 |
| Ventura | 7.25 | 0.00 | 7.25 |
| Yolo | 7.25 | 0.00 | 7.25 |
| Yuba | 7.25 | 0.50 | 7.75 |
And here’s a city sales tax rate.
| City sales tax rate | |||
| City | State, % | County + city, % | Total sales tax, % |
| Anaheim | 7.25 | 0.50 | 7.75 |
| Bakersfield | 7.25 | 1.00 | 8.25 |
| Chula Vista | 7.25 | 1.50 | 8.75 |
| Fontana | 7.25 | 0.50 | 7.75 |
| Fremont | 7.25 | 3.00 | 10.25 |
| Fresno | 7.25 | 1.10 | 8.35 |
| Garden Grove | 7.25 | 1.50 | 8.75 |
| Glendale | 7.25 | 3.00 | 10.25 |
| Hollywood | 7.25 | 2.25 | 9.50 |
| Huntington Beach | 7.25 | 0.50 | 7.75 |
| Irvine | 7.25 | 0.50 | 7.75 |
| Long Beach | 7.25 | 3.00 | 10.25 |
| Los Angeles | 7.25 | 2.25 | 9.50 |
| Modesto | 7.25 | 0.63 | 7.88 |
| Moreno Valley | 7.25 | 0.50 | 7.75 |
| North Glendale | 7.25 | 2.25 | 9.50 |
| Oakland | 7.25 | 3.00 | 10.25 |
| Oceanside | 7.25 | 1.00 | 8.25 |
| Oxnard | 7.25 | 2.00 | 9.25 |
| Oxnard Shores | 7.25 | 0.00 | 7.25 |
| Riverside | 7.25 | 1.50 | 8.75 |
| Sacramento | 7.25 | 1.50 | 8.75 |
| San Bernardino | 7.25 | 1.50 | 8.75 |
| San Diego | 7.25 | 0.50 | 7.75 |
| San Francisco | 7.25 | 1.38 | 8.63 |
| San Jose | 7.25 | 2.13 | 9.38 |
| Santa Ana | 7.25 | 2.00 | 9.25 |
| Santa Clarita | 7.25 | 2.25 | 9.50 |
| Santa Rosa | 7.25 | 2.00 | 9.25 |
| Stockton | 7.25 | 1.75 | 9.00 |
Specific types of goods are exempt from taxation, while other products face higher rates. Typically, most groceries products, prescription medicine, and some utilities are exempt.
Alcohol, Cigarette, and Gas Taxes in California
Several groups of products have different rates:
- alcohol;
- tobacco;
- gasoline.
Rates on alcohol and tobacco depend on the quantity per gallon of the product. For instance, wine has a rate of 20 cents per gallon. Regular gasoline applies 51.10 cents per gallon.
California Property Tax
In 1978, a Proposition 13 act was accepted in California. According to this law, the maximum property tax rate is 1% of a home’s actual value. Proposition 13 also limits increases in gained value to 2% every year.
The only exception to these rules is if the home has changed ownership or it got a major repair reconstruction. The mentioned law keeps the state’s tax rates below the national average.
California Estate Tax
There is no estate tax in California. Some states enforce special tax if a taxpayer inherits the estate or receives the estate as a gift. But California is exempt from this estate law.
California Insurance Tax
In California, the insurance tax is one of the biggest sources of state income. Typically, it leads to higher insurance prices for consumers since rates are imposed on premiums, and companies must pay these taxes.
Risks And Penalties For Not Paying Taxes In California
Whether you are an individual taxpayer or a business owner, you must report taxable income and pay taxes. In California, tax evasion is severely punishable. A person may end up in county jail or state prison for up to one year. Moreover, additionally, people pay fines of up to $20,000.
California may also require a taxpayer to pay their back taxes. In most cases, the state will also set a lien on an individual’s property as security until they pay.
Professional Help with Taxes in California
Most people have trouble with paying taxes, so it’s a wise idea to use the services of professional financial advisors or accountants. Many accounting companies offer the help of certified accountants that help individual taxpayers and businesses with their income, estate, etc., taxes.
Accountants help with determining all claimable credits and deductions. Claiming credits is a legal method for individual taxpayers and businesses to reduce their taxable income.
Professional accountants are ready to help with such tasks as taking care of preparing, filing, and even paying taxes to the IRS on your behalf.
Author: Charles Lutwidge
