Yes, California does have high taxes by most measures. The state levies the highest top personal income tax rate in the country at 13.3%, a base sales tax of 7.25% before local add-ons, and gasoline excise taxes among the steepest anywhere. The Tax Foundation puts the combined state and local tax burden at roughly 13.5% of personal income, which ranks California 46th out of 50 states.1Tax Foundation. State and Local Tax Burdens, Calendar Year 2022 That said, the burden is uneven. The progressive income tax lands hardest on high earners, property taxes are actually below the national average thanks to Proposition 13, and there is no state estate tax at all. Whether California feels expensive depends on how much you earn, when you bought your home, and how much of your income comes from investments.
Income Tax: Steep at the Top, Modest at the Bottom
California taxes personal income on a nine-bracket progressive scale under Revenue and Taxation Code Section 17041. Rates start at 1% on the first dollars of taxable income and reach 12.3% for single filers earning above roughly $743,000 in 2026, or married couples filing jointly above $1,000,000.2California Legislative Information. California Revenue and Taxation Code 17041 Bracket thresholds adjust each year for inflation.
Anyone with income over $1 million pays an additional 1% Mental Health Services Act surcharge, pushing the top marginal rate to 13.3%.3California Legislative Information. California Revenue and Taxation Code 17043 No other state matches it. For 2026, the single-filer brackets look like this:
- 1.00% up to $11,079
- 2.00% from $11,080 to $26,264
- 4.00% from $26,265 to $41,452
- 6.00% from $41,453 to $57,542
- 8.00% from $57,543 to $72,724
- 9.30% from $72,725 to $371,479
- 10.30% from $371,480 to $445,771
- 11.30% from $445,772 to $742,953
- 12.30% above $742,953
- 13.30% above $1,000,000 (with the 1% surcharge)
Married couples filing jointly get wider brackets. The 12.3% rate, for instance, starts above $1,000,000 of combined income rather than $742,953.
One point worth knowing: California does not give long-term capital gains a lower rate the way federal tax does. Short-term and long-term gains alike are taxed as ordinary income.4Franchise Tax Board. Capital Gains and Losses Sell stock, real estate, or a business at a large profit, and the gain can push you into the 13.3% bracket. That makes California particularly expensive for investors and for anyone with a big one-time windfall.
High wage earners also pay State Disability Insurance withholding of 1.3% on all wages in 2026, with no income cap after the ceiling was removed in 2024.5Employment Development Department. Contribution Rates, Withholding Schedules, and Meals and Lodging Stack SDI onto the top income tax rate and the effective top state rate on wages reaches 14.6%.
Sales Tax at the Register
Every retail purchase of tangible goods starts with a statewide base sales tax of 7.25%.6California Department of Tax and Fee Administration. Implementing New Local Jurisdictions or District Taxes Cities and counties often add voter-approved district taxes on top, pushing combined rates above 10% in some areas. The average combined state and local sales tax rate across California is roughly 8.98%.7Tax Foundation. California Tax Rates, Collections, and Burdens
Groceries (not prepared food), prescription medications, and a few other necessities are exempt. If you buy from an out-of-state retailer that does not collect California tax, you owe an equivalent use tax at the same combined rate, usually reported on your annual income tax return.8California Department of Tax and Fee Administration. California Use Tax
Property Taxes Are Lower Than You’d Expect
This is where California surprises people. Proposition 13, a 1978 constitutional amendment, caps the base property tax rate at 1% of assessed value.9Justia. California Constitution Article XIII A Section 1 – Tax Limitation Once your home’s assessed value is set, usually at the purchase price, it can only rise by 2% per year or the inflation rate, whichever is lower.10Justia. California Constitution Article XIII A Section 2 Long-term owners end up paying taxes based on a fraction of what their home is worth today.
The effective property tax rate across California averages about 0.70%, well below the national average and in the lower third of all states.7Tax Foundation. California Tax Rates, Collections, and Burdens The catch is California’s home prices. A 0.70% rate on a $900,000 house still produces an annual bill around $6,300. New buyers also pay far more than longtime neighbors because their assessment reflects current market value.
Supplemental Bills and Mello-Roos
New homeowners are often blindsided by a supplemental property tax bill. When a property changes hands or new construction is completed, the county assessor reappraises it at current market value and sends a prorated bill covering the difference for the rest of the fiscal year.11California State Board of Equalization. Supplemental Assessment Depending on closing timing, you could receive one or two supplemental bills on top of your regular payment.
Homes inside a Mello-Roos Community Facilities District also carry a special annual assessment that funds infrastructure like roads, schools, or sewers for that development. Sellers must disclose any Mello-Roos obligation before closing, and the charge can add hundreds or thousands of dollars per year to the tax bill.
Fuel and Other Excise Taxes
California’s gasoline excise tax is among the highest in the country. For July 2025 through June 2026, drivers pay 61.2 cents per gallon in state excise tax alone, before federal taxes and cap-and-trade program costs that further raise pump prices.12California Department of Tax and Fee Administration. Tax Rates for Motor Vehicle and Diesel Fuels The rate is adjusted each July based on the California Consumer Price Index.
Other everyday excise taxes include:
- Cigarettes: $2.87 per pack of 2013California Department of Tax and Fee Administration. Tax Rates – Special Taxes and Fees
- Other tobacco products: 54.27% of wholesale cost
- Beer and wine: $0.20 per gallon
- Distilled spirits: $3.30 per gallon at 100 proof or less, $6.60 per gallon above 100 proof
Vehicle owners also pay an annual Vehicle License Fee of 0.65% of the vehicle’s purchase price or value, which decreases over the first 11 renewal years.14California Department of Motor Vehicles. Registration Fees
What California Doesn’t Tax
California imposes no state-level estate tax and no inheritance tax. When a California resident dies, the estate is subject only to the federal estate tax, which applies above $13.99 million per person in 2025. Heirs receive inherited property with no additional California tax on the transfer, which makes the state comparatively favorable for passing on wealth despite its high income tax rates.
Does the High-Tax Reputation Apply to You?
The Tax Foundation’s 13.5% combined state and local burden works out to about $10,319 per capita in state and local tax collections.7Tax Foundation. California Tax Rates, Collections, and Burdens On the 2026 State Tax Competitiveness Index, which rates how well-structured each state’s tax code is for business, California ranks 48th out of 50.15Tax Foundation. 2026 State Tax Competitiveness Index
The weight is not spread evenly. California’s reliance on steeply progressive income taxes means high earners carry a disproportionate share, while middle-income households often see effective rates closer to those in other large states. Longtime homeowners benefit from Proposition 13’s assessment cap. The absence of an estate tax removes a cost several other high-tax states impose. If you earn a modest or middle-class income, own a home you bought years ago, and spend typically, your actual tax burden may feel much lighter than California’s reputation suggests. If you earn seven figures, hold investments with large unrealized gains, or recently bought at today’s prices, the state lives up to it.