Yes, California has a state income tax, and it is one of the highest in the country

California taxes income earned by residents and people who work in the state. The tax rate ranges from 1% to 13.3% depending on how much you earn. Unlike some states, California does not have a flat tax — the more you make, the higher percentage you pay. This is called a progressive tax system.

The state also taxes certain types of income that the federal government does not, such as some retirement distributions and gambling winnings. If you live in California or work there for part of the year, you will owe state income tax on that portion of your earnings.

Key Takeaways

  • California's state income tax rates range from 1% to 13.3%, with higher earners paying a larger percentage of their income.
  • You owe California state income tax if you are a resident or if you earned income while working in California, even if you live elsewhere.
  • California taxes some types of retirement income and investment gains that other states do not, which can affect your total tax bill.
  • You file California taxes using Form 540 or a shorter form if your income is below a certain threshold, separate from your federal return.
  • Tax refunds in California can take several weeks to arrive, and you can check the status of your refund on the Franchise Tax Board website.

How California's tax brackets work

California uses tax brackets, which means different portions of your income are taxed at different rates. You do not pay the top rate on all your income — only on the amount that falls into the highest bracket you reach. For example, if you are single and earn $70,000, you do not pay 9.3% on the entire amount. Instead, you pay 1% on the first portion, then 2% on the next portion, and so on, until you reach the bracket that applies to $70,000.

The brackets change each year based on inflation. The state publishes updated brackets in January. Your filing status — single, married filing jointly, head of household — determines which bracket applies to your income. You can find the current year's brackets on the California Franchise Tax Board website, which is the state agency that collects income tax.

California also has an additional 1% tax on income over $1 million, which was added in 2012. This means the highest earners can pay up to 13.3% in state income tax.

Who has to file a California tax return

You must file a California return if you are a resident and your income exceeds the filing threshold for your age and filing status. The threshold varies — for example, a single person under 65 must file if they earned more than about $20,000 in 2023, but this amount changes yearly. If you are 65 or older, the threshold is higher. You can find the exact threshold for your situation on the Franchise Tax Board website.

You also must file if you owe tax, even if your income is below the threshold. This includes situations where you had taxes withheld from your paycheck and you want a refund. Non-residents who earned income in California may also need to file, depending on how much they earned.

If your income is very low, you can file using Form 540-2EZ, a shorter form. If you use tax software or a tax preparer, they will determine which form you need based on your situation.

Types of income California taxes

California taxes wages, salaries, tips, and self-employment income. It also taxes interest, dividends, and capital gains — the profit you make when you sell an investment at a higher price than you paid. This is the same as federal tax.

California also taxes certain retirement distributions that the federal government does not. For example, distributions from a traditional IRA or 401(k) are taxed as income in California, just as they are federally. However, California does not tax Social Security benefits, which is a significant difference from federal tax. Pension income is taxed, but some military pensions and federal employee pensions have special rules.

Gambling winnings are taxed in California. If you win money at a casino, lottery, or horse racing track, you must report it. The entity paying you — the casino or lottery — will send you a form documenting the winnings, and you report that on your return.

How to file your California return

You file your California return separately from your federal return. Most people file both at the same time using tax software or a tax preparer. If you prepare your own return, you can use free software through the California Franchise Tax Board's Free Tax Program if your income is below a certain level — usually around $73,000 for most filers.

You can file online, by mail, or through a tax professional. If you file by mail, send your return to the address listed in the instructions for the form you are using. The deadline to file is the same as the federal deadline, usually April 15, though it can shift if that date falls on a weekend or holiday.

If you cannot file by the deadline, you can request an extension. An extension gives you until October 15 to file, but it does not extend the deadline to pay any tax you owe. If you owe tax and do not pay by April 15, you will owe interest and penalties on the unpaid amount.

Refunds and payment options

If you overpaid your taxes during the year — usually because too much was withheld from your paycheck — you will receive a refund. California refunds typically arrive within two to three weeks if you filed electronically and chose direct deposit. Paper checks take longer, usually four to six weeks or more.

You can check the status of your refund on the Franchise Tax Board website using your Social Security number and the amount of your refund. If your refund is delayed, the website will tell you why and what to do next.

If you owe tax, you can pay online through the Franchise Tax Board website, by mail, or through a payment plan. The state offers installment agreements if you cannot pay the full amount at once. Interest and penalties apply to unpaid tax, so paying as soon as possible reduces what you owe overall.

Deductions and credits available in California

California allows a standard deduction, which reduces the amount of income you pay tax on. The standard deduction amount depends on your age and filing status and changes each year. Most people use the standard deduction rather than itemizing deductions, because it is simpler and often results in a larger deduction.

California also offers tax credits, which directly reduce the tax you owe. For example, the Earned Income Tax Credit (EITC) is available to low- and moderate-income workers. California's version of this credit is often larger than the federal credit. Other credits include the Child and Dependent Care Expenses credit and credits for certain types of education expenses.

Some deductions and credits available federally are not available in California, and vice versa. For example, California does not allow a deduction for state and local taxes paid, which changed in 2018. Your tax software or preparer will identify which deductions and credits apply to your situation.

Frequently Asked Questions

Do I have to pay California income tax if I moved out of state?

No, not on income you earned after you moved, as long as you are no longer a resident. However, California considers you a resident if you maintain a home there or spend more than nine months in the state during the year. If you moved but still own property or spend significant time in California, the state may consider you a resident and require you to file. You can file a form with the Franchise Tax Board to establish non-resident status if you have questions.

What happens if I do not file a California tax return?

If you owe tax and do not file, you will owe penalties and interest on the unpaid amount. The Franchise Tax Board can also place a lien on your property or garnish your wages to collect the debt. If you simply forgot to file and are owed a refund, you can file a late return to claim it, though refunds are generally limited to the past four years.

Is Social Security taxed in California?

No. California does not tax Social Security benefits, even if your federal return includes part of your benefits as taxable income. This is one of the few types of retirement income that California does not tax.

Can I deduct state income tax I paid to another state?

No. California does not allow a deduction for income taxes paid to other states. If you worked in multiple states during the year, you will file returns in each state where you earned income, but you cannot deduct those taxes on your California return.

How do I know if I am considered a California resident for tax purposes?

You are a resident if you live in California or if you maintain a permanent home there. You are also a resident if you spend more than nine months in the state during the year, even if you do not own property. The Franchise Tax Board website has a residency questionnaire that can help you determine your status, or you can contact the board directly.