California's income tax is progressive, meaning the rate increases as your income rises

California taxes income at rates between 1% and 13.3%, depending on how much you earn. The state uses a progressive tax system, which means you pay different rates on different portions of your income — not one flat rate on everything you make. A single person earning $20,000 pays a lower rate than a single person earning $100,000.

The 13.3% rate is the highest in the nation and applies only to income above a certain threshold. For 2024, that threshold is roughly $680,000 for single filers and $1.36 million for married couples filing jointly, though these numbers change yearly with inflation adjustments. Most Californians pay rates between 2% and 9.3%.

California also has a separate Mental Health Tax of 1% on income over $1 million, which started in 2021. This is added on top of the regular income tax rate, so high earners may see a combined rate of 14.3% on income above that threshold.

Key Takeaways

  • California income tax rates range from 1% to 13.3% depending on your income level, with rates increasing as you earn more.
  • You pay different rates on different portions of your income — the first $10,000 might be taxed at 1%, the next $20,000 at 2%, and so on.
  • The highest 13.3% rate applies only to income above roughly $680,000 for single filers and $1.36 million for married couples in 2024.
  • An additional 1% Mental Health Tax applies to income over $1 million, bringing the top combined rate to 14.3%.
  • Income thresholds adjust each year for inflation, so the exact dollar amounts where rates change shift annually.

The 2024 tax brackets for California residents

California's tax brackets are the income ranges where each rate applies. For 2024, a single filer's brackets look like this: 1% on income up to $10,099; 2% from $10,099 to $23,942; 4% from $23,942 to $37,788; and so on, climbing to 13.3% on income over $680,063. Married couples filing jointly have higher thresholds at each bracket level.

These brackets change every year. The Franchise Tax Board, which administers California income tax, adjusts them annually based on inflation. If you earned $50,000 last year and the brackets shifted, your tax bill this year on the same $50,000 income will be slightly different. You can find the current year's brackets on the Franchise Tax Board website or on your tax return instructions.

The brackets apply to your taxable income, not your total income. Taxable income is what remains after you subtract deductions — either the standard deduction or itemized deductions, whichever is larger. A person earning $60,000 might have taxable income of only $48,000 after deductions, so they would use the brackets based on $48,000, not $60,000.

How to calculate your California income tax

To calculate your tax by hand, find your taxable income first. Subtract either the standard deduction (roughly $5,202 for single filers in 2024) or your itemized deductions from your gross income. Then locate your taxable income in the brackets and apply each rate to the portion of income in that bracket.

Example: A single filer with $40,000 in taxable income in 2024 would owe 1% on the first $10,099 ($101), 2% on the next $13,843 ($277), and 4% on the remaining $16,058 ($642). Total tax: roughly $1,020. This is why it is called progressive — you do not pay 4% on all $40,000, only on the portion above $23,942.

Most people do not calculate this by hand. The Franchise Tax Board provides tax tables that show the tax owed at each income level, and tax software does the math automatically. If you file a paper return, the tax tables are included in the instruction booklet.

What income counts toward California taxes

California taxes most income you receive: wages, salaries, tips, self-employment income, interest, dividends, rental income, and capital gains. If you work in California or are a California resident, you owe tax on income from any source, even if you earned it outside the state.

Some income is exempt. Social Security benefits are not taxed by California (though they may be taxed federally). Certain retirement distributions, workers' compensation, and disability benefits are also exempt. If you receive income from a source you are unsure about, the Franchise Tax Board website lists what counts as taxable income.

Non-residents who work in California owe tax only on income earned in the state. If you live in Nevada but work in California, you file a California return on your California wages only. The state has reciprocal agreements with some neighboring states that may affect how you file — Oregon, for example, has a reciprocal agreement with California.

Deductions that lower your California tax bill

California allows a standard deduction or itemized deductions, similar to federal taxes. The standard deduction for 2024 is $5,202 for single filers, $10,404 for married couples filing jointly, and $7,803 for heads of household. These amounts increase slightly each year.

If your itemized deductions (mortgage interest, property taxes, charitable donations, and other may have access to expenses) add up to more than the standard deduction, you can itemize instead. California generally follows federal rules on which deductions are allowed, though there are some differences — for example, California limits the deduction for state and local taxes to $10,000, matching the federal limit.

You can also claim personal exemptions on your California return, though the amount is small. For 2024, each exemption is worth $151 per person. A family of four would claim four exemptions totaling $604, which reduces taxable income.

Credits that reduce your California tax directly

Tax credits are different from deductions. A credit reduces your tax bill dollar-for-dollar, while a deduction reduces the income that gets taxed. A $1,000 credit saves you $1,000 in tax; a $1,000 deduction saves you roughly $40 to $130 in tax, depending on your bracket.

California offers several credits: the Earned Income Tax Credit (EITC) for low-income workers, the Child and Dependent Care Credit, the Renter's Credit for tenants with low income, and credits for education expenses. Some credits are refundable, meaning if the credit is larger than your tax bill, the state sends you the difference. The EITC is refundable; others are not.

To claim a credit, you must meet the income and other requirements set by the state. The Franchise Tax Board website lists all available credits and the forms needed to claim them. Many people miss credits they are may have access to to because they do not know they exist.

When you file and how to pay California income tax

California income tax returns are due on the same day as federal returns: April 15 of the following year (or the next business day if April 15 falls on a weekend). If you need more time, you can request a six-month extension, moving the deadline to October 15, though taxes are still due by April 15 if you owe money.

You file using Form 540 (the main return), Form 540NR (if you are a non-resident), or Form 540-2EZ (if you have simple income). You can file by mail, electronically through approved software, or through the Franchise Tax Board's free online filing system if your income is below a certain threshold.

If you owe tax, you pay when you file. If you expect to owe more than $500 in tax for the year, you may need to make estimated tax payments quarterly (April 15, June 15, September 15, and January 15). Self-employed people and those with investment income often fall into this category. The Franchise Tax Board provides a worksheet to determine if you need to make estimated payments.

Frequently Asked Questions

Do I owe California income tax if I work remotely for a company outside California?

If you are a California resident, you owe tax on all income, regardless of where your employer is located or where you work. If you are a non-resident who works remotely for a California company, you generally do not owe California tax on that income. The key is where you live, not where the company is based.

What is the difference between California and federal income tax rates?

California's top rate is 13.3%, while the federal top rate is 37%. The brackets are also different — federal brackets are wider, so you reach higher rates at higher income levels. You pay both California and federal tax; they are separate systems. Your federal return does not reduce your California tax or vice versa.

Can I deduct federal income tax from my California taxes?

No. California does not allow a deduction for federal income tax paid. However, you can deduct state and local taxes (SALT) on your federal return, up to $10,000 per year. This is a federal deduction, not a California one.

What happens if I do not file a California return?

If you owe tax and do not file, the Franchise Tax Board can assess penalties and interest. If you are owed a refund and do not file, you can still claim it, but you have only four years from the original due date to do so. After four years, unclaimed refunds go to the state.

Are retirement distributions taxed by California?

Most retirement distributions are taxed as income. However, distributions from certain accounts — like Roth IRAs after age 59½ — may not be. Social Security is not taxed by California. If you receive a pension or 401(k) distribution, consult the Franchise Tax Board website or a tax professional to determine what portion, if any, is taxable.