California's tax rates range from 1% to 13.3%, depending on your income level and filing status

California uses a progressive tax system, meaning the rate increases as your income rises. You do not pay one flat rate on all your income — instead, each portion of your earnings is taxed at the rate that applies to that bracket. The lowest bracket starts at 1% on income under a certain threshold, and the highest bracket reaches 13.3% on income above roughly $680,000 (for single filers in 2024). The exact dollar amounts that trigger each bracket change yearly and differ based on whether you file as single, married filing jointly, head of household, or married filing separately.

California also adds a Mental Health Tax of 1% on income over $1 million, which means high earners pay up to 13.3% plus this additional 1% surcharge. This tax has been in place since 2021 and applies to both residents and nonresidents who earn California-source income above that threshold.

Key Takeaways

  • California's base income tax rate ranges from 1% to 13.3% depending on your income bracket and filing status, with rates rising as income increases.
  • The dollar amounts that define each tax bracket change every year and are adjusted for inflation, so you should check the current year's brackets rather than relying on prior-year figures.
  • Residents pay tax on worldwide income, while nonresidents pay tax only on income earned in California, and the Mental Health Tax of 1% applies to anyone with over $1 million in income.
  • Your actual tax bill depends on deductions, credits, and adjustments you claim, so the marginal rate (the rate on your last dollar) is not the same as your effective rate (total tax divided by total income).

How the bracket system works

Each tax bracket represents a range of income taxed at a specific rate. For example, in 2024, a single filer might pay 1% on the first $10,000 of taxable income, then 2% on income from $10,001 to $23,000, then 4% on income from $23,001 to $37,000, and so on. You do not jump into the highest bracket all at once — only the income that falls within each bracket is taxed at that rate.

The Franchise Tax Board (FTB), California's tax authority, publishes updated brackets each year. These brackets shift upward annually to account for inflation, so the dollar thresholds change but the number of brackets and the rates themselves remain stable. You can find the current year's brackets on the FTB website or in the tax forms and instructions they publish.

Differences between residents and nonresidents

Residents of California pay state income tax on all income from any source — wages, investment gains, rental income, and so on — regardless of where the income is earned. If you live in California on December 31 of the tax year, you are considered a resident for that year.

Nonresidents pay California income tax only on income that is earned in California. This includes wages from a California employer, business income from a California business, and income from California real estate. If you work remotely for a California company but live in another state, you typically do not owe California tax on that income (though the rules are complex and depend on when you moved and your employment contract).

Part-year residents — people who moved into or out of California during the year — pay tax as a resident on income earned while they were a resident, and as a nonresident on income earned while they were not a resident.

The Mental Health Tax on high earners

Beginning in 2021, California imposed an additional 1% tax on income over $1 million. This tax applies to residents on worldwide income and to nonresidents on California-source income. It is separate from the base income tax and stacks on top of it, so a high earner in the top bracket pays 13.3% plus 1%, for a combined rate of 14.3% on income above $1 million.

This tax was created to fund mental health and substance abuse services. It has no sunset date, meaning it remains in effect unless the legislature repeals it. The $1 million threshold is not adjusted for inflation, so more people may become subject to it over time as incomes rise.

How deductions and credits affect your final bill

The tax rate you see in the brackets is applied to your taxable income, not your gross income. Taxable income is what remains after you subtract deductions and adjustments. California allows you to claim either the standard deduction (a set amount that depends on your filing status) or itemized deductions (the sum of specific expenses like mortgage interest and property taxes), whichever is larger.

Tax credits are different from deductions — they reduce your tax bill dollar-for-dollar rather than reducing the income that is taxed. Common California credits include the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and the Renter's Credit. If you have a credit of $500, your tax bill drops by $500, whereas a $500 deduction reduces your taxable income by $500 (which saves you roughly $50 to $70 depending on your bracket).

Your effective tax rate versus your marginal rate

Your marginal tax rate is the rate applied to your last dollar of income — the top bracket you fall into. Your effective tax rate is your total California income tax divided by your total income. Because of the progressive system, your effective rate is always lower than your marginal rate. For example, you might have a marginal rate of 9.3% but an effective rate of 5.1% because the lower portions of your income were taxed at 1%, 2%, and 4%.

When you are deciding whether a financial move makes sense — such as whether to defer income to next year or accelerate a deduction — your marginal rate is what matters, because it tells you how much tax you will save or owe on that specific transaction. Your effective rate is useful for understanding your overall tax burden, but it does not drive individual decisions.

Estimated tax payments if you are self-employed or have other income

If you do not have California taxes withheld from a paycheck — because you are self-employed, have investment income, or receive income from sources that do not withhold — you may need to make estimated tax payments to California four times a year. These payments are due on April 15, June 15, September 15, and January 15 of the following year.

The FTB provides a worksheet to calculate your estimated payment, and you can pay online through their website. If you underpay estimated taxes, you may owe a penalty and interest when you file your return, even if you ultimately do not owe additional tax. Conversely, if you overpay, you receive a refund or can explore the overpayment to next year's estimate.

Frequently Asked Questions

What is California's top tax rate?

California's top marginal rate is 13.3% on income above roughly $680,000 for single filers (the exact threshold changes yearly). If you earn over $1 million, you also pay an additional 1% Mental Health Tax, bringing the combined rate to 14.3% on income above that threshold.

Do I owe California tax if I moved out of state mid-year?

You owe California tax as a resident on income earned while you lived in California, and as a nonresident on California-source income earned after you moved. You will file as a part-year resident and report income in each category separately. The FTB provides a form to help you calculate this split.

How do I know which tax bracket I fall into?

The FTB publishes updated tax brackets each year on their website and in the instructions that come with Form 540 (California's main income tax return). You can also use the FTB's online tax calculator to estimate your bracket based on your income and filing status.

Does California tax retirement income differently?

California taxes most retirement income — including distributions from IRAs and 401(k)s — at the same rates as ordinary income. However, military pensions and some other specific types of retirement income may be partially or fully excluded. You should review your specific situation or consult a tax professional if you have substantial retirement income.

What happens if I do not pay my estimated taxes on time?

The FTB charges interest and a penalty if you underpay your estimated taxes. The penalty is typically a percentage of the underpayment, and interest accrues from the due date of each payment until you pay. You can reduce or eliminate the penalty if you can show that your income was uneven throughout the year or that you had a good reason for the underpayment.