California's tax brackets and rates for 2024

California has nine tax brackets that range from 1% to 13.3%. The rate you pay depends on your income level and filing status — single, married filing jointly, head of household, or married filing separately. The brackets adjust each year for inflation, so the income thresholds change annually.

For the 2024 tax year, a single filer earning $10,000 pays 1%, while someone earning $63,398 pays 9.3%. The top rate of 13.3% applies to high earners — for single filers, that kicks in at $680,063 and above. Married couples filing jointly hit the top rate at $1,360,126 and above. These thresholds are specific to 2024 and will shift upward in 2025.

California also taxes capital gains — profits from selling stocks, real estate, or other investments — at your ordinary income tax rate, not at a separate capital gains rate. This is different from federal tax, where long-term capital gains often receive preferential rates.

Key Takeaways

  • California's income tax ranges from 1% to 13.3% depending on how much you earn and your filing status.
  • The income thresholds for each bracket change every year due to inflation adjustments.
  • Capital gains are taxed as ordinary income in California, not at preferential rates.
  • You owe California tax on income earned in the state, even if you live elsewhere, and on worldwide income if you are a California resident.
  • Self-employed people must pay both the employee and employer portions of Social Security and Medicare taxes in addition to state income tax.

Who has to pay California state income tax

You owe California income tax if you are a resident of the state or if you earned income in California during the year. Residency is determined by where you spend most of your time and where your permanent home is located. If you moved to California mid-year, you may owe tax only on income earned after you arrived.

Non-residents who worked in California — such as someone who lives in Nevada but worked a contract job in Los Angeles — owe tax only on the income they earned within the state. You report this on Form 540-NR, the non-resident return. If you are a part-year resident, you use Form 540-2 and report income based on when you lived in California.

Military members stationed in California are generally not considered residents for tax purposes and do not owe state tax on military pay, though they may owe tax on other income sources.

Deductions and credits that reduce what you owe

California allows you to take either the standard deduction or itemize deductions, just like federal tax. For 2024, the standard deduction is $5,202 for single filers and $10,404 for married couples filing jointly. These amounts increase slightly each year. If you itemize, you can deduct mortgage interest, property taxes, charitable donations, and certain other expenses, but California limits the state and local tax deduction to $10,000 per year.

California also offers tax credits that directly reduce the amount you owe. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and can be worth hundreds to thousands of dollars. The Child and Dependent Care Credit helps pay for childcare expenses. The California Child Tax Credit provides up to $1,000 per child for families earning under $400,000. Unlike deductions, credits subtract directly from your tax bill, making them more valuable.

You must report these credits and deductions on your California return, Form 540 or 540-2. The Franchise Tax Board website lists all available credits and the income limits for each one.

How self-employment tax works in California

If you are self-employed, you pay California income tax on your net business income using the same brackets as employees. But you also owe self-employment tax — a federal tax that covers Social Security and Medicare. Self-employment tax is 15.3% of your net earnings: 12.4% for Social Security and 2.9% for Medicare. You pay both the employee and employer portions because you are both.

You can deduct half of your self-employment tax when calculating your adjusted gross income, which lowers your California taxable income slightly. You report self-employment income and tax on Schedule C (Form 1040) for federal purposes and Schedule CA (Form 540) for California. If your net self-employment income is $400 or more, you must file and pay self-employment tax.

California does not have a separate self-employment tax, but it does tax your business income at the regular income tax rates. Some self-employed people also owe the California net investment income tax of 3.8% if their income exceeds certain thresholds, though this is primarily a federal tax that California conforms to.

Filing deadline and payment options

California income tax returns are due on the same date as federal returns — April 15 of the following year, or the next business day if April 15 falls on a weekend or holiday. If you file your federal return late, your California return is also considered late. You can request an extension to October 15, but taxes owed are still due by April 15 or you will owe penalties and interest.

You can pay your California tax bill online through the Franchise Tax Board website, by mail, or through an authorized payment processor. If you owe money, paying by the deadline avoids a failure-to-pay penalty of 0.5% per month. If you file late, you face a failure-to-file penalty of 5% per month, up to 25% of the tax owed.

If you expect to owe more than $500 in tax, you may need to make estimated tax payments throughout the year. Estimated payments are due April 15, June 15, September 15, and January 15 of the following year. Self-employed people and those with investment income often use estimated payments to avoid a large bill at tax time.

Special taxes that apply in California

Beyond income tax, California imposes a net investment income tax of 3.8% on certain high earners. This tax applies to single filers with modified adjusted gross income over $250,000 and married couples filing jointly over $500,000. It covers interest, dividends, capital gains, and rental income. This is a state-level tax separate from the federal net investment income tax, though the rules are similar.

California also has a Mental Health Services Tax, often called the "millionaire's tax," which is a 1% tax on income over $1 million for single filers and $2 million for married couples filing jointly. This tax was approved by voters in 2020 and funds mental health and homeless services. It applies to residents and part-year residents based on income earned in California.

Certain types of income are exempt from California tax. These include Social Security benefits, some retirement distributions, and income earned by active-duty military members. If you receive these types of income, you may not owe tax on them, though you still need to file if your other income exceeds the filing threshold.

How to file your California return

You file your California return using Form 540 (resident return), Form 540-2 (part-year resident return), or Form 540-NR (non-resident return). You can file online through the Franchise Tax Board website, by mail, or through a tax preparation software that supports California returns. Many free options are available if your income is below a certain threshold — the Franchise Tax Board publishes a list of free software each year.

You will need your Social Security number, federal adjusted gross income from your federal return, and documentation of any deductions or credits you claim. If you have income from multiple sources — W-2 wages, self-employment, rental income, or investments — gather all the forms and statements before you start. The Franchise Tax Board website has a checklist of documents to collect.

If you file electronically, you typically receive a refund within two to three weeks. If you mail your return, allow six to eight weeks. If you owe money, the Franchise Tax Board will send you a bill with payment instructions and a deadline.

Frequently Asked Questions

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

No, once you move out of California and establish residency elsewhere, you no longer owe California income tax on new income. However, you may still owe tax on income you earned while living in California. The Franchise Tax Board looks at where you spent most of your time and where your permanent home was located to determine residency status.

What is the difference between the standard deduction and itemizing?

The standard deduction is a flat amount you can subtract from your income — $5,202 for single filers in 2024. Itemizing means listing specific expenses like mortgage interest and charitable donations instead. You choose whichever gives you the larger deduction. Most people use the standard deduction because it is simpler and often larger.

Can I deduct federal taxes from my California return?

No, California does not allow you to deduct federal income taxes. However, you can deduct state and local taxes (SALT) up to $10,000 per year if you itemize. This includes California income tax, property taxes, and sales taxes — you choose which combination gets you closest to the $10,000 limit.

What happens if I do not file a California return?

If you owe tax and do not file, you face penalties and interest that grow over time. The failure-to-file penalty is 5% per month of the tax owed, up to 25%. Interest accrues at a rate set by the Franchise Tax Board, currently around 8% annually. Filing late is better than not filing at all, even if you cannot pay immediately.

Do I owe California tax on unemployment benefits?

Yes, California taxes unemployment insurance benefits as ordinary income. You report them on your tax return, and they count toward your total income for determining which tax bracket applies. Some people have taxes withheld from their unemployment payments to avoid owing a large amount at tax time.