California taxes your income at rates between 1% and 13.3%, depending on how much you earn

California has a progressive income tax system, meaning the tax rate increases as your income increases. You do not pay the top rate on all your income — you pay different rates on different portions of it. For 2024, the lowest bracket starts at 1% on income under $10,000 (for single filers), and the highest bracket is 13.3% on income over $680,000. These bracket amounts change each year.

The state also adds a 1% Mental Health Tax on income over $1 million, bringing the maximum rate to 13.3%. This tax has been in place since 2013 and funds mental health and substance use programs.

California taxes all income sources: wages from employment, self-employment income, rental income, investment gains, retirement distributions, and most other money you receive. The main exceptions are Social Security benefits (which are not taxed by California) and certain other specific income types defined by state law.

Key Takeaways

  • California's income tax rates range from 1% to 13.3%, with rates increasing as your income increases.
  • Tax brackets change every year, so the income thresholds that determine your rate are different in 2024 than they were in 2023.
  • You pay tax on wages, self-employment income, rental income, investment gains, and retirement withdrawals, but not on Social Security.
  • If you work in California but live in another state, you may owe California tax on income earned within the state.
  • The Franchise Tax Board (FTB) administers California income tax and handles returns, payments, and disputes.

How tax brackets work and what you actually pay

A common mistake is thinking that if you move into a higher tax bracket, your entire income is taxed at that rate. That is not how it works. Each bracket applies only to the income within that range.

For example, if you are a single filer in 2024 and earn $50,000, you do not pay 9.3% on all $50,000. Instead, you pay 1% on the first $10,000, 2% on income from $10,001 to $23,942, 4% on income from $23,943 to $37,788, and 6% on the remaining income up to $50,000. Only the income in each bracket gets taxed at that bracket's rate. This is called your marginal tax rate (the rate on your last dollar earned) versus your effective tax rate (the average rate on all your income).

The state publishes updated tax brackets each January on the Franchise Tax Board website. If you file taxes yourself, you need the brackets for the year you are filing, not the current year.

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 filing status. For 2024, a single person with no dependents must file if they earned more than $23,942 in gross income. The threshold is higher for married couples filing jointly, heads of household, and other filing statuses. These thresholds also change annually.

Non-residents who earned income in California must file a return on that California-source income, even if they would not be required to file in their home state. This applies to people who worked in California for part of the year or who have rental property in the state.

Even if you do not meet the filing requirement, you may want to file anyway if you had taxes withheld from your paychecks or if you are owed a refund. Filing is the only way to recover overpaid taxes.

Tax withholding and estimated payments

If you are an employee, your employer withholds California income tax from your paycheck based on the W-4 form you complete. The amount withheld depends on your filing status, number of dependents, and other income. If you do not have enough withheld, you will owe money when you file. If too much is withheld, you receive a refund.

If you are self-employed or have income that is not subject to withholding (such as rental income or investment income), you may need to make estimated tax payments four times per year. These payments are due in April, June, September, and January. The Franchise Tax Board provides a worksheet to calculate how much to pay based on your expected annual income.

You can adjust your withholding at any time by submitting a new W-4 to your employer. This is useful if your income changes, you get married or divorced, or you have a major life change that affects your tax situation.

Deductions and credits that reduce what you owe

California allows you to reduce your taxable income through deductions. You can choose either the standard deduction (a flat amount based on your filing status) or itemize deductions if they exceed the standard amount. For 2024, the standard deduction for a single filer is $5,202. Itemized deductions include mortgage interest, property taxes, charitable donations, and medical expenses above a certain threshold.

California also offers tax credits, which directly reduce the tax you owe rather than reducing your income. Common credits include the Earned Income Tax Credit (EITC) for lower-income workers, the Child and Dependent Care Credit, and the Renter's Credit. Unlike deductions, credits are subtracted from your final tax bill dollar-for-dollar.

Some credits are refundable, meaning if the credit exceeds your tax liability, you receive the difference as a refund. Others are non-refundable, meaning they can reduce your tax to zero but cannot create a refund. The Franchise Tax Board website lists all available credits and the income limits for each.

Filing your return and paying taxes owed

You can file your California return on paper using Form 540 or electronically through the state's e-file system. Most people file electronically because it is faster and reduces errors. You can file yourself using tax software, through a tax professional, or through free services if your income is below a certain threshold.

The filing deadline is typically April 15 (or the next business day if April 15 falls on a weekend). If you cannot file by the deadline, you can request an automatic extension, which gives you until October 15. An extension delays your filing deadline but does not delay your payment deadline — taxes owed are still due by April 15, or you will owe interest and penalties.

You can pay taxes owed when you file, or set up a payment plan with the Franchise Tax Board if you cannot pay in full. The state accepts payments by check, electronic transfer, credit card, or debit card. Credit card payments include a processing fee.

What happens if you move to or from California

If you move out of California during the year, you are a resident for the part of the year you lived there and a non-resident for the part you lived elsewhere. You must file a part-year resident return and pay tax only on income earned while you were a California resident. You also file a return in your new state on income earned there.

If you move to California from another state, you become a resident when you establish a permanent home in California with the intent to stay. You pay California tax on all income from the date you become a resident, even if you still have income from your former state. Some income sources (like retirement accounts) may be taxed by both states, but California offers credits to prevent double taxation in some cases.

The Franchise Tax Board defines residency based on physical presence and intent. If you are unsure whether you are a resident, non-resident, or part-year resident, you can contact the FTB or consult a tax professional.

Frequently Asked Questions

Do I have to pay California income tax if I work in California but live in another state?

Yes. California taxes income earned within the state regardless of where you live. You file a non-resident return on your California-source income. You also file a return in your home state on all your income. Some states offer credits to prevent double taxation, so check your home state's rules.

Is Social Security taxed by California?

No. California does not tax Social Security benefits. However, if you have other income above certain thresholds, some of your Social Security may be taxed by the federal government. California's exemption is separate from federal tax rules.

What if I cannot pay my California income tax bill?

You can set up a payment plan with the Franchise Tax Board. Contact the FTB by phone or through their website to discuss options. If you do not pay or arrange a plan, the state will charge interest and penalties, and may place a lien on your property or garnish your wages.

How do I know if I need to file a California return?

You must file if your gross income exceeds the threshold for your filing status (for 2024, $23,942 for single filers). Even if you do not meet the threshold, file if you had taxes withheld or if you are owed a refund. The Franchise Tax Board website lists current thresholds for all filing statuses.

Can I file my California return before I file my federal return?

Yes. You can file your California return independently of your federal return. However, if you make changes to your federal return after filing California, you may need to file an amended California return. Many people file both at the same time to avoid this complication.