California has been ranked as the third worst state for taxes by the Tax Foundation, a non-partisan tax research group in Washington, D.C. California has the highest state level sales tax rate in the nation at 8.25% and has some of the highest income tax rates in the country.
Find out how these California state taxes will affect you whether you’re buying a home, shopping, or making money.
California Property Tax
Property in California is assessed at 100% of full cash value (a.k.a. fair market value). Under Proposition 13, the maximum amount of tax on real estate is limited to 1% of the full cash value and cannot increase more than 2% over the previous year. Under the homestead program, homeowners who live in their homes as their principal residence qualify for a $7,000 reduction in the taxable value of their property.
The Homeowner Assistance (HRA) program that provided property tax relief to the blind, disabled, or elderly has been discontinued. State funding has been suspended for this program.
California Income Tax
California income tax rates range from 1.25% to 9.55% and are levied on California residents’ income and non-residents’ income from California sources. The highest rate begins at $46,349 of income and those with incomes over $1 million have to pay an additional 1% tax surcharge (for a total tax of 10.55%).
Many of your federal deductions may be limited or disallowed in California, but many state tax credits are available including: an exemption credit for yourself and your dependents, a credit for renters, a credit for single parents or divorced parents, a credit for people who have a dependent parent, and several more.
Other California Taxes
Sales Tax: 8.25% (food and prescription drugs exempt). California allows cities and counties to charge additional sales taxes, and depending on the locality, rates can be as high as 10.50%
Gasoline Tax: 46.6 cents/gallon
Cigarette Tax: 87 cents/pack of 20