How Much Do Taxes Cost in California?

California’s tax system funds public services and infrastructure through several distinct taxes on earnings, purchases, and property. The amount an individual or family pays is not a single flat rate but a combination of state and local levies. Understanding these primary taxes is the first step for residents to determine their financial responsibilities within the state.

California State Income Tax

California employs a progressive income tax system, which means that as an individual’s taxable income increases, so does the rate they pay on subsequent earnings. For the 2024 tax year, the state has nine tax brackets with marginal rates ranging from 1% to 12.3%. An additional 1% Mental Health Services Tax is levied on personal income over $1 million, pushing the top marginal rate to 13.3%.

A marginal tax rate is the rate applied to the last dollar of income earned, not the rate applied to your total income. For example, a single filer with $80,000 in taxable income does not pay a flat percentage on the entire amount. Instead, their income is taxed in portions according to the brackets, with only the portion of their income falling into the highest applicable bracket being taxed at that top rate.

The state’s income tax applies broadly to most types of earnings. This includes wages, salaries, tips, and income from self-employment or business activities. Retirement income, such as withdrawals from 401(k)s and IRAs, is also treated as regular income and taxed according to the same progressive brackets. California residents are taxed on all income, regardless of where it was earned, while nonresidents and part-year residents are taxed only on income derived from California sources.

Unlike the federal system, which offers lower tax rates for long-term capital gains, California makes no such distinction. All capital gains, whether short-term or long-term, are taxed as ordinary income. This means the profit from selling an asset like stock or real estate is added to your other income and taxed at your marginal income tax rate.

The following table illustrates the marginal tax rates for a Single individual filing a California state tax return for the 2024 tax year.

| Tax Rate | Taxable Income |
| — | — |
| 1.00% | $0 to $10,756 |
| 2.00% | $10,757 to $25,499 |
| 4.00% | $25,500 to $40,245 |
| 6.00% | $40,246 to $55,866 |
| 8.00% | $55,867 to $70,606 |
| 9.30% | $70,607 to $360,659 |
| 10.30% | $360,660 to $432,787 |
| 11.30% | $432,788 to $721,314 |
| 12.30% | $721,315+ |

Source: California Franchise Tax Board (FTB)

State and Local Sales Tax

When making purchases in California, consumers pay a sales tax that combines a statewide rate with various local taxes. The base statewide sales tax rate is 7.25%, but this is rarely the final rate.

The total sales tax rate varies because of district taxes imposed by local jurisdictions like cities and counties to fund local services. These district taxes can range from 0.10% to 1.00%, and some areas have multiple taxes in effect. This system results in combined rates that can exceed 10%; for instance, the rate in Los Angeles is 9.75%, while some cities in Alameda County reach 10.75%.

Most tangible personal property—physical goods you can buy—is subject to sales tax. This includes items like clothing, furniture, electronics, and appliances. Restaurant meals and hot prepared foods are also taxable.

Certain items are exempt from sales tax. Major exemptions include most food products for home consumption, such as groceries, as well as prescription medicines and certain medical devices.

California Property Tax

The foundation of California’s property tax system is Proposition 13, passed in 1978. This proposition established a base property tax rate of 1% of a property’s assessed value. The total rate can be higher due to additional voter-approved taxes for local purposes, meaning the actual tax rate paid often varies by location.

Under Proposition 13, a property’s assessed value is established at its fair market value at the time of purchase, known as the base year value. This value can only increase by an inflation factor of up to 2% per year, regardless of how much the property’s actual market value might have grown.

A reassessment to current market value only occurs upon a change in ownership or new construction. This system means that two identical homes side-by-side could have vastly different property tax bills. The home purchased decades ago will have its taxes calculated based on a much lower assessed value than the one purchased recently at current market prices.

Other Common State Taxes

State Disability Insurance (SDI)

California requires employees to contribute to the State Disability Insurance (SDI) program through a mandatory payroll deduction. This program provides short-term Disability Insurance and Paid Family Leave (PFL) benefits to eligible workers. For 2025, the SDI withholding rate is 1.2% of an employee’s wages, and the removal of the wage ceiling means all wages are subject to this tax.

Gasoline Taxes

When purchasing fuel in California, drivers pay a state excise tax on each gallon of gasoline and diesel. California’s excise tax on gasoline is 59.6 cents per gallon. This per-gallon tax is separate from sales tax and is designated to fund transportation infrastructure. The rate is subject to annual adjustments.

Vehicle License and Registration Fees

Operating a vehicle in California requires the payment of annual license and registration fees. A primary component of this is the Vehicle License Fee (VLF), which is calculated at 0.65% of the vehicle’s purchase price or current value. In addition to the VLF, there are other flat fees, such as a registration fee and a California Highway Patrol (CHP) fee, as well as potential county-specific fees. A Transportation Improvement Fee is also charged based on the vehicle’s value, ranging from $25 for vehicles valued under $5,000 to $175 for those valued at $60,000 or more.

Key California Tax Adjustments

The final tax cost for a Californian is determined after applying various adjustments, including deductions and credits that are distinct from federal rules. One way to reduce taxable income is by taking either the standard deduction or itemizing deductions. For the 2024 tax year, the California standard deduction is $5,540 for single filers and $11,080 for those who are married filing jointly, head of household, or a qualifying surviving spouse.

One common, non-refundable credit is the Renter’s Credit. To qualify, a renter must meet specific income limits and have paid rent in California for at least half the year. For 2024, the adjusted gross income limit is $52,421 for single filers and $104,842 for joint filers. The credit amount is $60 for single individuals and $120 for married couples filing jointly.

Another credit is the Child and Dependent Care Expenses Credit, which helps offset the cost of care for a qualifying individual so the taxpayer can work or look for work. To be eligible, the taxpayer’s federal adjusted gross income must be $100,000 or less, and the care must have been provided in California. The credit is calculated as a percentage of qualifying expenses, with a maximum of $3,000 in expenses for one qualifying person and $6,000 for two or more.