What Is Considered High Income in California?
Understand the complex and varied definitions of high income in California, shaped by its unique economy and cost of living.
Defining “high income” in California is complex, as no single figure applies across all contexts. What constitutes high income is influenced by state tax regulations, economic metrics, and specific legislative mandates.
The unique economic landscape of California, characterized by thriving technology and entertainment industries alongside significant agricultural sectors, contributes to diverse income distributions. This economic complexity, coupled with some of the highest housing costs in the nation, means that an income level considered substantial in one area or for one purpose might be viewed differently in another. Understanding what is deemed high income thus requires examining these different frameworks, each with its own specific criteria and implications.
California State Income Tax Brackets
California operates a progressive income tax system, meaning that as taxable income increases, so does the marginal tax rate applied to that income. This structure inherently defines higher income levels by subjecting them to increasingly larger percentages of taxation. For the 2024 tax year, California has nine marginal income tax rates, with the highest rates applying to the highest income tiers.
For a single filer, the 9.3% marginal tax rate applies to taxable income exceeding $70,606. Moving up the income scale, the 10.3% rate begins at $360,660, followed by an 11.3% rate for income over $432,787. The highest marginal rate, 12.3%, is applied to taxable income exceeding $721,314 for single individuals. These thresholds illustrate how the state tax system categorizes and taxes higher earnings.
Married individuals filing jointly face different income thresholds for these same marginal rates, reflecting their combined income. For joint filers, the 9.3% rate applies to income over $141,212, and the 10.3% rate begins at $721,318. The 11.3% rate starts at $865,574, and the top 12.3% marginal rate applies to taxable income above $1,442,628. Head of household filers also have their own set of thresholds, with the 9.3% rate starting at $96,107, the 10.3% rate at $490,493, the 11.3% rate at $588,593, and the 12.3% rate at $980,987.
These tax brackets are adjusted annually for inflation by the California Franchise Tax Board (FTB), ensuring that the income thresholds reflect changes in the cost of living. Reaching these top marginal rates means an individual or couple contributes a higher proportion of their income to state taxes, effectively defining them as high-income earners from a state revenue perspective. The progressive nature of California’s tax code is a direct mechanism for identifying and taxing higher income levels.
Statistical Measures of Income
Beyond tax brackets, “high income” in California can also be understood through statistical and economic benchmarks that reflect the broader income distribution across the state. These measures provide a comparative perspective, indicating how an individual’s or household’s earnings stack up against the general population. Median income figures are particularly useful for this purpose, as they represent the midpoint of all incomes.
The median household income in California was $96,334 in 2023. California’s per capita income, which represents the average income per person, was $80,771 in 2023.
Further insight into high income is provided by income percentiles, which delineate the income levels required to be among the top earners. To be considered among the top 1% of earners in California, an individual’s income needed to be at least $844,266 in 2023, according to an analysis of IRS tax filer data. While this figure applies to individual earners, household income for the top 10% in California was estimated to be $341,276 or more.
These statistical benchmarks highlight the substantial earnings required to be in the upper echelons of California’s income distribution. It is important to note that these figures can vary considerably by region within California. For example, the Bay Area reported a per capita income of $131,000 in 2023, more than double that of regions like the Central Valley or Inland Empire, reflecting significant differences in local economies and cost of living across the state.
Specific Legislative Income Thresholds
California legislation specifically defines “high income” for particular purposes beyond general income tax brackets, most notably through the Mental Health Services Act (MHSA). This act, passed by California voters as Proposition 63 in November 2004, established a dedicated funding mechanism for mental health services. A key component of the MHSA is a 1% surtax imposed on individual taxable income.
This additional 1% tax applies to taxable income that exceeds $1,000,000. This threshold is explicitly defined in California Revenue and Taxation Code Section 17043. For taxpayers with income above this amount, the 1% surtax is added to their regular state income tax liability, bringing the highest marginal tax rate in California to 13.3% for this income segment.
The MHSA surtax clearly establishes a specific legislative definition of “high income” for a targeted purpose. It distinguishes a particular income level at which individuals contribute an additional amount to state services, separate from the general progressive tax rates. This legislative threshold serves to fund mental health programs and services across California counties.
The MHSA surtax, with its explicit $1,000,000 income threshold, is a prominent example of how California law designates a specific income level as “high” for a state purpose.