California state taxes include a progressive personal income tax that tops out at 13.3%, a 7.25% statewide base sales tax that climbs higher with local district add-ons, property taxes capped at 1% of assessed value under Proposition 13, corporate and LLC taxes with an $800 annual minimum, and excise taxes on gasoline, tobacco, alcohol, and cannabis. There is no state estate or inheritance tax. The Franchise Tax Board collects personal and business income taxes; the California Department of Tax and Fee Administration handles sales, fuel, tobacco, alcohol, and cannabis taxes.
Personal Income Tax Rates
California’s personal income tax runs through nine brackets, starting at 1% and reaching 12.3% at the top. Income above $1 million carries an extra 1% surcharge under the Mental Health Services Act, which brings the effective top marginal rate to 13.3%.1California Department of Health Care Services. Mental Health Services Act
Brackets are progressive, so the top rate only applies to the dollars that fall inside the top bracket. A single filer earning $100,000 pays 1% on the first $11,079, 2% on the next slice, and so on up through the 9.3% band, not 9.3% on the whole amount.
For single filers and married filing separately, the 1% bracket covers taxable income up to $11,079, the 9.3% bracket runs from $72,725 to $371,479, and the 12.3% bracket begins at $742,954. Married couples filing jointly see each threshold roughly doubled: the 9.3% bracket runs from $145,449 to $742,958, and the 12.3% bracket begins at $1,485,907. Head-of-household filers have their own schedule, with thresholds between the single and joint figures.2Franchise Tax Board. 2025 California Tax Rate Schedules
Who Owes California Income Tax
Residents are taxed on all income from every source, including wages from an out-of-state employer, investment gains, and freelance work done anywhere. Nonresidents owe California tax only on income from California sources.
Residency comes down to your overall ties to the state. The Franchise Tax Board weighs where you spend your time, where your family lives, which state issued your driver’s license, where you are registered to vote, and where you keep bank accounts and professional licenses. Strength of connection matters more than the raw count. Spending more than nine months of the tax year in California creates a presumption of residency.3Franchise Tax Board. Guidelines for Determining Resident Status
Returns and any balance owed are due April 15, 2026. California grants an automatic six-month extension to file, through October 15, 2026, with no application required, but any tax owed must still be paid by April 15 to avoid penalties. Taxpayers living or traveling outside the country on the deadline get a shifted due date of June 15, with an automatic filing extension to December 15.4Franchise Tax Board. Due Dates Personal
Filing late without an extension costs 5% of the unpaid tax per month, capped at 25%. A separate late-payment penalty of 5% applies to the underpaid amount, plus 0.5% per month the balance remains unpaid. The Franchise Tax Board can also garnish wages and place liens on property.5Franchise Tax Board. Common Penalties and Fees
Deductions and Credits That Lower the Bill
California’s standard deduction is well below the federal figure. Single filers and married filing separately can claim $5,706; married couples filing jointly, heads of household, and qualifying surviving spouses can claim $11,412. You can itemize instead if that produces a larger deduction.6Franchise Tax Board. Deductions
The California Earned Income Tax Credit (CalEITC) is refundable and goes to lower-income workers. You need earned income of at least $1 and no more than $32,900. The maximum credit runs from $302 with no qualifying children to $3,756 with three or more. CalEITC stacks on top of the federal EITC.7Franchise Tax Board. Eligibility and Credit Information CalEITC
Renters get a small nonrefundable credit. Single filers with California income of $53,994 or less receive $60; joint filers and heads of household with income of $107,987 or less receive $120. You must have paid rent for at least half the year on a non-tax-exempt property and cannot be claimed as a dependent.8Franchise Tax Board. Nonrefundable Renters Credit
Two differences from federal rules are worth planning around. California does not tax Social Security benefits, a meaningful break for retirees since the federal government taxes a portion for many recipients. It also does not recognize Health Savings Accounts: contributions are not deductible on your state return, and account earnings are treated as taxable income by California.9Franchise Tax Board. Pension and Annuity Guidelines
Sales and Use Tax
The statewide base sales tax rate is 7.25%, covering the state general fund, local public safety, and county transportation. Unprepared groceries and prescription medicines are exempt.
Local jurisdictions layer voter-approved district taxes on top, ranging from 0.10% to 2.00% each, and some areas stack more than one. The total at the register exceeds 10% in certain cities and counties.10California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rate Information
If an out-of-state retailer doesn’t collect California sales tax, which happens with many online purchases, you owe use tax at the same rate. Report it on the worksheet included with your annual state income tax return. Vehicles, boats, and aircraft are the exception: use tax on those is paid directly to the California Department of Tax and Fee Administration.11California Department of Tax and Fee Administration. California Use Tax
Property Tax Under Proposition 13
Proposition 13, passed in 1978, caps the general property tax rate at 1% of assessed value. Assessed value is set by the purchase price when you acquired the property, not current market value, and annual increases are limited to 2% or the inflation rate, whichever is lower.12California Legislative Information. California Constitution Article XIII A Tax Limitation Long-term homeowners often pay on an assessed value well below what their home would sell for today.
A change in ownership or new construction triggers a reassessment to current fair market value, resetting the base for the new owner. Local voter-approved bond debts and special assessments are added on top of the 1%, typically pushing the effective rate to 1.1% to 1.25%. Unpaid property taxes incur a 10% penalty, and after five years of delinquency the county tax collector can sell the property at auction.
Owner-occupants can claim a homeowners’ exemption that reduces assessed value by $7,000, saving roughly $70 a year at the 1% rate. The home must be your principal residence as of January 1 of the tax year, and the exemption applies automatically once you file the claim with your county assessor.13California State Board of Equalization. Homeowners Exemption
Corporate Tax, LLC Tax, and the $800 Minimum
C-corporations doing business in California pay a flat 8.84% on net income from California sources. Banks and financial institutions pay 10.84%. Every corporation incorporated, registered, or operating in California also owes a minimum franchise tax of $800 per year, even in loss years. Newly incorporated or newly qualified corporations are exempt from the minimum in their first taxable year.14Franchise Tax Board. C Corporations
Every LLC organized or doing business in California owes an annual tax of $800 regardless of profit. A first-year exemption for LLCs formed between 2021 and 2023 has expired; LLCs formed in 2024 or later owe the $800 in year one.15Franchise Tax Board. Limited Liability Company
LLCs with higher revenue also owe a graduated gross receipts fee based on California income: $900 at $250,000 to $499,999, $2,500 at $500,000 to $999,999, $6,000 at $1,000,000 to $4,999,999, and $11,790 at $5,000,000 or more. The fee is in addition to the $800 and must be estimated and paid by the 15th day of the sixth month of the LLC’s tax year.15Franchise Tax Board. Limited Liability Company
Excise Taxes
California applies excise taxes to specific goods, usually built into the shelf or pump price.
Gasoline carries a state excise tax of $0.612 per gallon for the period from July 2025 through June 2026, funding highway maintenance and environmental programs. Federal fuel taxes and applicable sales taxes add to the total.16California Department of Tax and Fee Administration. Sales Tax Rates for Fuels
Cigarettes are taxed at $0.1435 per cigarette, which comes to $2.87 per pack of 20. Other tobacco products are taxed as a percentage of wholesale cost.17California Department of Tax and Fee Administration. Tax Rates – Special Taxes and Fees
Alcohol excise taxes are charged per gallon and vary by type: beer and still wine at $0.20, champagne and sparkling wine at $0.30, and distilled spirits at $3.30. The tax is collected from distributors and reflected in the retail price.18California Department of Tax and Fee Administration. Alcohol Tax Collected
Retail cannabis carries a 15% excise tax on the gross receipts of the transaction, including the selling price plus any local cannabis business taxes and delivery fees. The 15% rate is locked in through 2028 under legislation signed by Governor Newsom. Regular sales tax also applies on top of the excise.19California Department of Tax and Fee Administration. Tax Facts for Cannabis Businesses20Governor of California. Governor Newsom Signs Legislation Cutting Taxes on Cannabis
No State Estate or Inheritance Tax
California does not impose a state estate tax or inheritance tax. The state estate tax was eliminated effective January 1, 2005, following the phase-out of the federal state death tax credit. Heirs and beneficiaries owe no state-level tax on inherited assets, though federal estate tax rules still apply to very large estates.21California State Controllers Office. California Estate Tax