Once hailed as a premier retirement destination, California has relinquished its reputation due to its high taxation environment. The state’s income tax rates range from 1% to 9.3%, positioning it among the states with the highest income tax rates nationwide.
All residents of California are subjected to a minimum income tax rate of 1%. Those earning between $7,169 and $16,994 annually face a 2% income tax rate. Individuals falling within the $16,994 to $26,821 income bracket are subject to a 4% income tax rate. For earners between $26,822 and $37,233, the income tax rate climbs to 6%. Taxpayers earning between $37,234 and $47,055 annually are taxed at an 8% rate. Those with incomes surpassing $47,056 face the highest state income tax rate of 9.3%. Moreover, California imposes an additional 1% mental health tax on individuals earning over $1 million annually.
Adding to its tax burden, California stands as one of the select states implementing an alternative minimum tax (AMT). The current AMT rate in California stands at 7.5%, potentially affecting filers who would otherwise be exempt from taxation due to deductions.
Learn more: Robert Hall & Associates | Los Angeles Tax Preparation & Consulting