The state of California has often been the target of ire from national politicians because of tax rates that a great many people consider way too high. And although what constitutes “too high” is a matter of considerable debate, what is certainly true is that residents in the Golden State are paying more in taxes than most other Americans — with the fifth-highest total tax burden and the third-highest overall average tax rate.
Here’s a closer look at California’s tax rates and how those state taxes might affect you.
|California State Taxes|
|Rate Range of Taxes||0% to 12.3%|
|State Sales Tax Rate Range||7.25% to 10.25%|
|State Income Tax Rate Range||1% to 12.3%|
|State Inheritance and Estate Tax Rate Range||0%|
|State Property Tax Rate||Average of 0.81%|
California State Income Tax
At 12.3 percent, the top income tax rate for California is among the highest in the country, and it’s also even higher for anyone earning $1 million a year or more. The Mental Health Services tax rate is a 1 percent surcharge on incomes over $1 million, pushing the rate to 13.3 percent for top earners.
|California Income Tax Rates|
|2018 Estimated Income Taxes||Tax Rate|
|$0 to $8,223||1.00%|
|$8,223 to $19,495||2.00%|
|$19,495 to $30,769||4.00%|
|$30,769 to $42,711||6.00%|
|$42,711 to $53,980||8.00%|
|$53,980 to 275,738||9.30%|
|$275,738 to $330,884||10.30%|
|$330,884 to $551,473||11.30%|
|$551,473 and over||12.30%|
Californians’ income taxes hit almost any level of income, including 1 percent of the first $8,223 you earn. Because of the way California tax brackets are structured, if you make an income in the half-million range you’ll have to shell out over $50,000 a year in state income taxes alone. And, it’s important to remember, you’ll be paying that 12.3 percent on top of the 37 percent of your earnings that you owe to the federal government.
California State Sales Taxes
Sales taxes in California start at a rate of 7.25 percent, which includes both the base rate of 6 percent and a 1.25 percent add-on to fund county governments.
California State Sales Taxes
|Sales Tax||Tax Rate|
|Statewide California sales tax rate||7.25%|
|Includes mandatory local add-on of 1.25%|
The California sales tax rate is the highest statewide sales tax rate in the country, but it’s also not the final rate in most places. Most California counties levy additional sales taxes on top of that 7.25 percent, and many California cities — or even districts — also have their own sales tax, which is on top of both state and county rates.
That all adds up to an average sales tax rate of 8.54 percent — the ninth highest in the nation — with some cities reaching rates exceeding 10 percent by the time all the different local and county rates are tacked on.
The state’s highest rates are paid by residents of (or visitors to) a handful of cities/districts in Los Angeles County. Compton, Hawthorne, Long Beach, Lynwood, Pico Rivera, Santa Monica and South Gate all have a sales tax rate of 10.25 percent when all is said and done. Meanwhile, if you’re looking for where you can avoid paying any more than you have to, the counties of Alpine, Calaveras, Lassen, Modoc, Plumas, Sierra, Sutter and Trinity all pay the minimum 7.25 percent rate and have no cities with add-ons.
The good news is that some products, like food that isn’t prepackaged or eaten in a restaurant, are exempt from state sales tax.
California Property Taxes
Property taxes vary widely by their locale, but the effective rate paid for the state overall is 0.813 percent. Property taxes can be an important source of revenue for city governments, so check your local rates to know exactly what to expect on your tax bill.
California Inheritance Tax and Estate Tax
Like most states in the U.S., California does not have a state inheritance tax. It was phased out beginning in 2002, and for anyone who has passed away after Jan. 1, 2005, there is no need to file.
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