How California State Income Tax Works: Brackets, Deductions and Credits Explained

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If you’re living or working in California, understanding how the California state income tax system works can help you plan better and possibly save money. The Golden State uses a progressive tax system with some of the highest rates in the nation — but also offers various deductions and credits to offset what you owe.

Whether you’re a full-time resident, part-year filer, or new to the state, this guide will walk you through California’s current income tax brackets, how to calculate what you owe, and what filing requirements apply to you.

Keep reading to learn more about California state income tax brackets and how to calculate how much you’ll owe.

California Income Tax

According to Tax Foundation data, Californians pay the highest marginal state income tax rate in the country — 13.3%. However, California has a graduated tax rate, which means your rate increases with your income. The specific rate you pay depends on your tax bracket. 

Both residents and businesses need to understand California’s state income tax brackets and how they impact what you owe. Doing so can ensure that you’re paying enough in taxes to avoid a surprise tax bill at the end of the year and help you accurately estimate your take-home pay.

California uses a progressive tax structure, which means that the more you earn, the higher your tax rate is. As your income increases, income above the tax bracket threshold will be taxed at a higher rate. 

Tax brackets break your taxable income down into layers, and apply a certain tax rate to each layer. The rate is expressed as a percentage. California’s tax rates are graduated, so the percentage increases with each additional layer of taxable income. 

California Income Tax: 2024-2025 Brackets

California’s income tax rates range from 1% to 12.3%, depending on your income level and filing status. Here’s how the tax brackets apply to single filers:

Example: If you earn $80,000 as a single filer:

• The remaining amount is taxed progressively up to 9.3%
• First $10,758 taxed at 1%
• Next $14,742 taxed at 2%
• Next $14,742 taxed at 4%

Calculating Your California State Income Tax

California has nine different tax brackets, ranging from 1% to 12.3% tax rates. The tax rates and income brackets will vary depending on your filing status: 

• Schedule X tax brackets are for single taxpayers and married taxpayers filing separate returns.
• Schedule Y tax brackets are for married taxpayers filing joint returns or filing as a qualifying surviving spouse.
• Schedule Z tax brackets are for taxpayers filing as head of household.

Below, you can see the current tax brackets from the State of California’s Franchise Tax Board.

Single Filers and Married Filing Separately

Married Filing Jointly

Head of Household

Note: Income over $1 million is subject to an additional 1% Mental Health Services Tax.

Taxpayers With Taxable Income of $100,000 or Less

Taxpayers with taxable income of $100,000 or less don’t have tax brackets, per se. Although these individuals are also taxed on a graduated basis, the tax is a flat amount from the California Tax Table, which lists hundreds of small income ranges, such as $0 to $50, and assigns a tax amount to each.

The highest tax amount for a single filer (or married filing separately) is $5,951 for the $99,951 to $100,000 income range.

What Is Taxable Income in California?

Your California taxable income is your federal-adjusted gross income after California-specific adjustments. This includes income from various sources such as wages, salaries, dividends, interest, rental income and capital gains.

However, it excludes certain types of income, like FICA taxes withheld from your paycheck and certain types of capital gains tax exemptions.

Calculating Your California State Income Tax

To calculate what you owe:

1. Start with your federal AGI from IRS Form 1040.
2. Make California-specific adjustments using Schedule CA (540).
3. Choose your deduction — standard or itemized.
4. Apply the correct tax table based on your income and status.
5. Subtract eligible credits.

Want a simple breakdown? Use an online California tax calculator for a quick estimate.

What Is Taxable Income in California?

California starts with your federal adjusted gross income (AGI) and then applies its own rules. Common adjustments include:

• Student loan interest
• Mortgage interest (CA limits differ from federal)
• State tax refunds (may be taxable)
• Health savings account (HSA) contributions
• Gambling losses (limited)

For a full list, refer to Schedule CA (540) on the Franchise Tax Board’s forms page.

Common Adjustments Made to a California Tax Return

• Mortgage interest adjustments: You can deduct additional mortgage interest from your California tax return, but certain specific rules apply. 
• State and local taxes: California does not allow a deduction for state and local taxes on its state return. 
• Gambling losses: You are unable to deduct gambling losses on a CA tax return. 
• Charitable contributions: Must be made to a qualified organization at the time of the donation.

For more information on adjustments, please see Schedule CA for a full adjustment list.

Who Must File a California Income Tax Return?

Whether you’re a full-time resident, part-time resident or nonresident, you must file a California state tax return if you meet certain parameters. 

Take a look at this chart to determine if you must file a California tax return: 

Residency Requirements

You’re considered a California resident if you meet the following: 

• You spend most of the year in CA.
• Your spouse or children live in CA.
• You have a CA driver’s license or voter registration.

Gross Income & AGI Thresholds

California adjusts your federal AGI based on state-specific rules. If you want to access gross income tables for California, those can be found here.

Here’s a table of California-adjusted gross income thresholds:

California Adjusted Gross Income Thresholds

California Tax Deductions and Credits

There are two ways to reduce the tax you owe: Deductions and credits. 

Deductions on your California tax return

Tax deductions reduce your taxable income. If you made $100,000, for example, and had a deduction of $10,000, your taxable income would then be $90,000. 

You have the option to use either the standard deduction or itemized deductions. Itemized deductions should be claimed only when greater than the standard deduction, and can include the sum of expenses like the following:

• Home mortgage interest on purchases up to 1,000,000
• Gambling losses
• Medical expenses that exceed 7.5% of your AGI
• Certain job expenses
• Alimony 

Credits on your California tax return 

Tax credits, meanwhile, are subtracted from the amount you owe. If you owe $10,000 in taxes and receive a $1,000 tax credit, you’ll only owe $9,000.

Tax credits in California include: 

• California Earned Income Tax Credit – Helps lower-income workers. 
• Child Adoption Costs Credit – Covers qualified adoption costs. 
• Child and Dependent Care Expenses Credit – Helps offset childcare costs while you look for work. 
• College Access Tax Credit – Offers a credit for contributions to the California College Access Tax Credit Fund.
• Dependent Parent Credit – Provides credits if you support a parent who doesn’t live with you and meets income limits.
• Foster Youth Tax Credit – Eligible former foster care youth from 18-25 can qualify for a foster youth tax credit. 
• Joint Custody Head of Household – Offers credit to parents who share custody but do not qualify as heads of households. 
• Nonrefundable Renter’s Credit – Low- to moderate-income renters who meet income and residency rules can qualify for this credit. 
• Prior Year Alternative Minimum Tax – Recovers prior-year AMT payments when you are no longer subject to AMT.
• Senior Head of Household Credit – A credit for seniors 65+ who qualify as head of household with modest incomes.
• Young Child Tax Credit – Bonus if you qualify for CalEITC and have a child under six. 

How To Calculate Your California State Income Tax

Wondering how to calculate your California State income tax? Follow these step-by-step guidelines: 

Step 1: Find your correct form – You may need to fill out Form 540, 540NR or 540EZ.

Step 2: Use your IRS 1040 – This form will help you get started and can be a point of reference. 

Step 3: Identify specific adjustments – Appy CA-specific adjustments using Schedule CA. 

Step 4: Decide on deductions – Choose either standard or itemized deductions. 

Step 5: Calculate tax – Choose the correct table when calculating your tax. 

Step 6: Determine credits – Apply those credits to your return. 

Step 7: Complete and file – Review your return and then submit it. 

To file, you can use CalFile, approved tax software or a tax preparer. Manual filing is available but may be more time-consuming. 

Filing Deadlines and Penalties

It’s important to file your taxes by the deadlines to avoid potential penalties. Check this chart to make sure you’re complying with your deadlines. 

California grants automatic six-month extensions for filing returns but not for paying tax owed. So if you know how much you owe, you can pay your tax by April 15 and file your return by October 15.

You can also use the extension if you don’t owe, but if you’re due a refund, you won’t receive it until after you file your return.

Final Take to GO: Understanding California State Income Tax

California’s tax system may seem complicated, but once you understand how the brackets, adjustments, and credits work, it becomes much more manageable. Knowing where you stand — whether as a resident, part-year filer or out-of-state earner with California income — can help you file confidently and avoid penalties.

Want to get ahead? Use tax software, consult a CPA or visit the Franchise Tax Board to access the most up-to-date tools and resources.

For more on saving at tax time, explore our guide to state income taxes or compare tax software platforms to find the right one for you.

Information is accurate as of May 9, 2025.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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