Taxes State Taxes California Taxes Are Among the Highest in the Nation Prepare to pay if you live, work, or play in the golden state By Tonya Moreno, CPA Updated on January 6, 2023 Reviewed by Michelle P Scott In This Article View All In This Article California State Income Tax California Tax Deductions California Sales Tax California State Excise Taxes California Property Tax Capital Gains Tax in California Inheritance and Estate Taxes FAQs Photo: The Balance / Chloe Giroux California taxes are known for being among the highest in the country, although the state gives residents a break when it comes to inheritance and estate taxes. Property taxes aren't particularly high. But income tax rates can hit you hard, as can sales tax rates. Learn more about what the golden state takes when it comes to taxes. Key Takeaways California's income tax adds a "millionaire's tax," a 1% surcharge to incomes of $1 million.The state's sales tax was the highest in the nation in 2021 at 7.25%.California's property taxes are less harsh, with an effective rate of 0.74% as of 2022.The state doesn't have an inheritance tax. Its estate tax was repealed in 2005. California State Income Tax California has 10 personal income tax rates, ranging from 1% to 13.3% as of 2022. The highest rate of 13.3% begins at incomes of $1 million or more for single filers as of 2022. The 13.3% rate is referred to as the "millionaire's tax." It's an added 1% surcharge over the top 12.3% rate that applies to other taxpayers. The lowest 1% rate is reserved for single earners of less than $10,099 in taxable income in 2022, and of less than $20,198 for married and registered domestic partnership (RDP) taxpayers filing jointly and $20,212 for head of household earners. Income taxes are levied on both residents' incomes and on income earned in the state by nonresidents. Many states have reciprocity agreements with other states that allow nonresidents to work there without paying income tax except to their home state. But California isn't one of them. However, the state does offer a tax credit for income taxes paid to another state, so you're not taxed twice on the same income. Note Some local jurisdictions in California also impose a variety of taxes. California Tax Deductions The state's standard deduction is a fairly decent $5,202 per person if you're single, increasing to $10,404 if you're married or in an RDP and filing jointly, or head of household or qualifying widow(er). Many federal deductions are limited or disallowed in California. But other state tax credits are available, including an exemption credit for yourself and your dependents, a credit for renters, a credit for single or divorced parents, and a credit for people who have dependent parents. California Sales Tax California's state-level sales tax rate remains the highest in the nation at 7.25% as of 2022. Combined with local sales taxes, the rate can reach as high as 9.75% in some California cities, although the average is 8.57% as of 2022. California's average local tax rate is 1.57% as of 2021. The highest local tax rate comes in at 2.50%. Other California Excise Taxes Like many states, California also adds an additional tax to cigarettes and gasoline. A pack of cigarettes will cost you an extra $2.87 there as of July 2022. The tax used to be 87 cents. Legislation ramped it up by an additional $2 on April 1, 2017. Gasoline will run you an additional 53.9 cents a gallon under legislation that began increasing the tax incrementally effective November 1, 2017. That's the highest rate in the country. In November 2022, the average California driver paid $4.99 per gallon of regular unleaded compared to the national average of $3.52. Note California's gas taxes went to the ballot in November 2018 when opponents of the tax sought to implement a law that would prohibit any new transportation fuel taxes without a majority public vote. The measure was defeated. California Property Tax The state's property taxes aren't all that bad. The effective rate is 0.74% as of 2022. Property in California is assessed at 100% of its full cash or fair market value. But you might catch a few property tax breaks provided for under state law: Under Proposition 13, the maximum tax on real estate is limited to 1% of its full cash value. Taxes can't increase more than 2% over the previous year. Homeowners who live in their homes as their principal residences qualify for a $7,000 reduction in the taxable value of their property under the state's homestead program. Senior citizens, the blind, and the disabled have been able to postpone their property taxes for their principal places of residence under the property tax postponement program that began on September 1, 2016. Capital Gains Tax in California Unlike federal law, the state doesn't give you a break for long-term gains on assets you hold onto for over a year. You'll pay taxes on your profits at your personal income tax rate regardless of the duration of ownership if you sell any property or asset for more than your tax basis or investment in it. Note You'll end up paying the second-highest capital gains tax rate in the world if your sale is such that you must also pay the federal long-term capital gains tax rate of 20%. California Inheritance and Estate Taxes This is one area in which California residents get a tax break. The legislation eliminated California's estate tax when federal estate tax laws changed on January 1, 2005. The state has no inheritance tax. At least you can die there tax-free. Frequently Asked Questions (FAQs) Does California still reimburse property taxes for some homeowners? Unfortunately, the state's homeowner and rental assistance program, which effectively reimbursed qualified taxpayers for a portion of property taxes paid on their homes or as part of their rental payments, has been discontinued. What are California's capital gains tax rates? California taxes gains, but its tax law includes no provisions for a specific capital gains tax. Gains are taxed as regular income. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. State of California Franchise Tax Board. "Tax News: November 2022." State of California Franchise Tax Board. "Other State Tax Credit." Tax Foundation. "State and Local Sales Tax Rates, Midyear 2022." California Department of Tax and Fee Administration. "Tax Rates – Special Taxes and Fees, Cigarette and Tobacco Products Tax." California Department of Tax and Fee Administration. "Tax Rates – Special Taxes and Fees." AAA. "State Gas Price Averages." Ballotpedia. "California Proposition 6, Voter Approval for Future Gas and Vehicle Taxes and 2017 Tax Repeal Initiative (2018)." Tax-Rates.org. "California Property Taxes 2022." California State Board of Equalization. "California Property Tax An Overview," Page 5. California State Board of Equalization. "Homeowners' Exemption." California State Controller's Office. "Property Tax Postponement." State of California Franchise Tax Board. "Capital Gains and Losses." IRS. "Topic No. 409 Capital Gains and Losses." California State Controller's Office. "California Estate Tax." State of California Franchise Tax Board. "Homeowners’ and Renters’ Assistance Program Eligibility Expansion."