Yes, California has a state income tax, and it applies to most residents and workers
California charges state income tax on wages, self-employment income, interest, dividends, and other earnings. If you live in California or work there, you almost certainly owe it. The tax rate varies based on how much you earn — it ranges from 1% on the lowest incomes to 13.3% on the highest, making California one of the highest state income tax rates in the country.
The state also taxes retirement income, including Social Security in some cases, and income from investments. If you moved to California or left the state, you may still owe tax on income earned while you were a resident, even if you no longer live there.
Key Takeaways
- California's state income tax rate ranges from 1% to 13.3% depending on your income level, with higher earners paying the top rate.
- You owe California income tax if you are a resident, work in the state, or earned income while living there during the tax year.
- Social Security benefits are taxable in California if your total income exceeds certain thresholds, unlike in many other states.
- The Franchise Tax Board (FTB) is the state agency that collects income tax and processes returns.
- If you do not owe federal income tax, you may still owe California state income tax because the thresholds and rules differ.
How California's income tax brackets work
California uses a progressive tax system, meaning the rate increases as your income goes up. You do not pay the top rate on all your income — you pay the lower rate on the first portion, then the next rate on the next portion, and so on. The exact dollar amounts that trigger each rate change every year based on inflation.
For example, if you are single and earned $50,000 in 2024, you would not pay 9.3% on the entire amount. Instead, you would pay 1% on the first portion, then 2% on the next portion, and so on, until you reach the bracket that applies to your highest dollar earned. The state publishes updated tax tables each year on the Franchise Tax Board website.
The top rate of 13.3% applies only to very high earners. Most working Californians pay between 2% and 9.3%. The exact rate you pay depends on your filing status (single, married filing jointly, head of household) and your total taxable income for the year.
Who must file a California state return
You must file a California return if you are a resident and your income exceeds the threshold for your filing status. These thresholds are lower than the federal thresholds, which means you may owe California tax even if you do not owe federal tax. The threshold amounts change yearly and depend on your age and filing status.
You also must file if you are a part-year resident (you moved into or out of California during the year) and your income exceeds the threshold for that period. Non-residents who earned income in California may also need to file, even if they did not live there for the full year.
If you are self-employed, you must file if your net earnings from self-employment are $400 or more, regardless of your filing status. This is the same threshold as federal self-employment tax.
What types of income are taxed in California
California taxes wages, salaries, tips, and bonuses. It also taxes self-employment income, rental income, capital gains from selling investments, and interest and dividend income. Retirement distributions from IRAs and 401(k)s are taxed as ordinary income.
Social Security benefits are taxable in California if your total income (including half of your Social Security benefits) exceeds $25,000 for single filers or $32,000 for married couples filing jointly. This is different from the federal rule, which taxes Social Security only for higher-income households. Many retirees are surprised to learn that California taxes Social Security when other states do not.
Unemployment benefits, workers' compensation, and certain disability payments are not taxed. Some income sources, like municipal bond interest, are also exempt from California tax.
Deductions and credits available to California taxpayers
California allows a standard deduction based on your filing status and age. You can claim this amount without itemizing. The standard deduction is lower than the federal standard deduction, which is one reason you may owe California tax even if you do not owe federal tax.
If you itemize deductions on your federal return, you can also itemize on your California return, but the amounts may differ. California does not allow deductions for state and local taxes (SALT) paid, a change that took effect in recent years.
California offers several tax credits, including the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and the Renter's Credit. These credits reduce the amount of tax you owe dollar-for-dollar. The state EITC is separate from the federal EITC and may provide additional money back.
How to file your California state return
You file your California return using Form 540 (or Form 540-NR if you are a non-resident). You can file online through the Franchise Tax Board website, by mail, or through a tax preparer. The deadline to file is typically April 15, the same as the federal deadline, though you can request an extension.
If you file your federal return electronically, you can also file your California return electronically. The FTB offers free filing options for lower-income taxpayers through the CalFile program and through participating tax software companies. If you use a tax preparer, they will handle both your federal and state returns.
You must include your Social Security number or Individual Taxpayer Identification Number (ITIN) on your return. If you are filing as a couple, both spouses must provide their numbers. Attach any required schedules, such as Schedule CA if you are a part-year resident or if you have income from outside California.
What happens if you move out of California
If you move out of California during the year, you are a part-year resident and owe tax only on income earned while you lived in the state. You must file a California return and report your move date. The state considers you a resident based on where you maintained your permanent home and where your personal and financial ties were strongest.
If you move out and later move back, each period of residency is treated separately. The Franchise Tax Board may audit your residency status if you claim part-year residency, so keep documentation of your move — such as a lease, utility bills, or a driver's license with your new address — to support your claim.
If you earned income in California after you moved away, you may still owe California tax on that income as a non-resident. This applies to rental income from California property, income from a California business, or wages earned from a California employer.
Frequently Asked Questions
Do I owe 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. If you work in California, you owe California income tax on your wages. Your employer should withhold California tax from your paycheck. You will file a non-resident return with California and a resident return with your home state.
Is Social Security taxed differently in California than other states?
Yes. California taxes Social Security benefits if your total income exceeds $25,000 (single) or $32,000 (married filing jointly). Most other states do not tax Social Security at all. If you receive Social Security and live in California, you may owe state tax even if you owe no federal tax.
What if I do not owe federal income tax but earn money in California?
You may still owe California state income tax. California's income thresholds are lower than federal thresholds, and the state taxes some income sources that the federal government does not. File a California return if your income exceeds the state threshold for your filing status.
Can I get an extension to file my California return?
Yes. You can request an extension to file your California return, which gives you until October 15 instead of April 15. However, an extension to file is not an extension to pay. You must estimate your tax liability and pay it by April 15 to avoid penalties and interest.
Where do I send my California tax return if I file by mail?
Mail your return to the Franchise Tax Board at the address shown in the Form 540 instructions. The address depends on your filing status and whether you are including a payment. The FTB website lists the correct mailing address for your situation. Filing electronically is faster and reduces the chance of errors.