California Income Tax Calculator

California state tax quick facts Income tax: 1% - 13.3% Sales tax: 7.35% - 10.25% Property tax: 0.75% average effective rate Gas tax: 53.32 cents per gallon of regular gasoline, 55.07 cents per gallon of diesel

California has among the highest taxes in the nation. Its base sales tax rate of 7.25% is higher than that of any other state, and its top marginal income tax rate of 13.3% is the highest state income tax rate in the country. The Golden State fares slightly better where real estate is concerned. In 2016, the average homeowner paid just 0.75% of their actual home values in real estate taxes each year, 15th lowest in the country.

Of course, all of these values vary depending on each taxpayer’s individual finances. For example, if you earn less than $54,000 per year, your marginal rate in California will be no higher than 8%, and your effective income tax rate (the actual amount you pay in taxes) will be closer to 4%. Below, we’ll dig into the specifics of California’s tax system and how it might affect your wallet.

California Income Tax

California has a progressive income tax, which means rates are lower for lower earners, and grow as incomes increase, similar to the federal income tax system. In all, there are nine income tax brackets in California, with rates ranging from as low as 1% up to 12.3%. The table further demonstrates tax rates for Californians.

In addition to those income tax brackets, there is a 1% tax on personal income over $1 million. As part of the Mental Health Services Act, this tax provides funding for mental health programs in the state. It functions like a normal income tax and means that the top marginal rate in California is, effectively, 13.3%. That’s the highest rate in the U.S., but it only applies to income earners with over $1 million in taxable income.

It’s important to note that those rates do not apply to actual income, but adjusted gross income. That is income after all applicable deductions and exemptions have been subtracted. The standard deduction in California is $4,129 for a single filer and $8,258 for joint filers. Taxpayers in California may also be eligible for a number of tax credits, for financial events and expenses including childcare, buying a new home, the purchase of an electric vehicle and installing solar panels on their house. If you are looking to get help with finding what credits you are eligible for, tax preparation software like Credit Karma and Jackson Hewitt might be helpful or hiring a professional accountant

California Sales Tax

California’s base sales tax is 7.25%, highest in the country. That means that, regardless of where you are in the state, you will pay an additional 7.25% of the purchase price of any taxable good. Since many cities and counties also enact their own sales taxes, however, the actual rate paid throughout much of the state will be even higher than that. The table below shows state and county tax rates for each of the 58 counties in California as well as the combined state, county and city income taxes for the 100 largest cities. These are the rates you would actually pay on taxable products within city limits.

Most items are subject to these rates, but there are some exceptions, as well as certain products that face higher rates. Among the products on which sales taxes are not required are most groceries, prescription medicine and utilities like gas and electricity.

California Alcohol and Cigarette Tax

Products that face separate tax rates include alcoholic beverages, tobacco products and gasoline. For alcohol and cigarettes, rates are assessed based on the quantity of the product purchased. Wine, for example, faces a rate of 20 cents per gallon. For gasoline, there is a 2.25% sales tax rate in addition to a 29.7 cent per gallon excise tax.

California Property Tax

Proposition 13, passed by California’s voters in 1978, sets the maximum allowable property tax rate at 1% of a home’s assessed value. It also limits increases in assessed value to 2% every year, except if the home has changed ownership or undergone construction. That law has helped keep property taxes paid by Californians below the national average, and in some cases, significantly so. In San Diego, for example, residents pay just 0.69% of home values in property taxes annually.

If you are looking to refinance or purchase a property in California using a mortgage, check out our guide to mortgage rates and getting a mortgage in the Golden State.

Calculate Your Property Taxes: California Property Tax Calculator

California Estate Tax

California has no estate tax. In some states, inheritance or gifts are subject to a special tax, in addition to the federal estate tax. Not in California, although inherited income may still be subject to the state income tax.

California Insurance Tax

Insurance premiums are taxable in California. The insurance tax is the fourth largest source of revenue for the state’s general fund. It is imposed on insurance premiums and paid by insurance companies, although in practice it may lead to higher rates for consumers.

Photo credit: flickr

California is the largest state by population, with over 38 million residents. The state’s largest economic industries include agriculture, entertainment and high technology. The five most populous cities in the state are Los Angeles, San Diego, San Jose, San Francisco and Fresno.