7 Things California Taxpayers Need To Know Before Filing in 2025

California's sunshine and beaches come with a price tag, and taxes are a big part of it.

Before the 2025 tax deadline approaches, dive into this guide to understand your state tax rates and affordable filing solutions.

We'll break down the numbers, bust myths, and empower you to navigate tax season with confidence (and maybe even boost your bank account).

Did you sell any investments at a profit in 2025? If so, those profits are subject to a federal capital gains tax that differs depending on how long you held the assets before selling. 

While a handful of states don't charge state income taxes on capital gains, California isn't one of them.

Unlike federal capital gains taxes, which charge different tax rates depending on how long you held your investment before selling, California taxes all capital gains at the standard state income tax rate. 

Whichever tax rate you paid (based on your income bracket) on your state income tax is the same rate you'll pay on any capital gains.

Luckily for those inheriting assets in California, the state doesn't impose either an estate or inheritance tax.

Forty states — including California — don't charge any taxes on retirees' Social Security benefits. While you may still owe federal taxes on your Social Security checks, you won't pay a penny of your retirement benefit toward the state government.

Thanks to a law that limits annual property tax increases to 2% at most, California's property taxes are relatively low — or at least lower than you might expect in a state notorious for its high housing costs in densely developed urban hubs.

For the 2025 tax year, the effective California property tax rate was 0.75%. 

California calculates individual income tax based on residents' tax brackets, which are based on how much income you earned over the 2025 tax year while residing and working in California.

If you're single, filing as an individual, or you're married but filing taxes separately from your spouse, your state income tax rate in California is as follows:

• Between $0 and $10,756: 1%

• Between $10,756 and $25,499: 2%
• Between $25,499 and $40,245: 4%
• Between $40,245 and $55,866: 6%
• Between $55,866 and $70,606: 8%
• Between $70,606 and $360,659: 9.3%
• Between $360,659 and $432,787: 10.3%
• Between $432,787 and $721,314: 11.3%
• Between $721,314 and more: 12.3%

If you're married and filing jointly (or if you're filing as a qualifying widow or widower), your state income tax rates break down like so:

• Between $0 and $21,512: 1%
• Between $21,512 and $50,998: 2%
• Between $50,998 and $80,490: 4%
• Between $80,490 and $111,732: 6%
• Between $111,732 and $141,212: 8%
• Between $141,212 and $721,318: 9.3%
• Between $721,318 and $865,574: 10.3%
• Between $865,574 and $1,442,628: 11.3%
• Over $1,442,628: 12.3%

If you're filing as head of household, the following are your state income tax rates: 

• Between $0 and $21,527: 1%
• Between $21,528 and $51,000: 2%
• Between $51,001 and $65,744: 4%
• Between $65,745 and $81,364: 6%
• Between $81,365 and $96,107: 8%
• Between $96,108 and $490,493: 9.3%
• Between $490,494 and $588,593: 10.3%
• Between $588,593 and $980,987: 11.3%
• $980,988 or more: 12.3%

Whether you're filing as a single individual, jointly as a married couple, or with any other taxpayer status, you can file your state taxes for free using CalFile, a free e-filing tax service offered through the state's Franchise Tax Board.

To get started, create a free Franchise Tax Board account. From there, just follow the filing process laid out on the site. According to the Board, state taxes can be filed in an average of 15 to 30 minutes.

According to a WalletHub study, California residents come in dead last in terms of receiving a solid return on investment on their taxes. 

California taxpayers have the highest state tax burden per capita in the nation, but the state ranks 37th out of 50 in terms of government services.

That's not to say the average California doesn't enjoy a high quality of life — but it does mean your tax bill might not translate directly into government services that benefit you directly.

California's state taxes are undeniably high, so you'd be forgiven for putting off filing until the last second. Still, the tax filing deadline is ticking closer, so it's important to file sooner rather than later to avoid filing late.

Plus, the news isn't all doom and gloom. Although the taxes you paid throughout the year might be high, you can at least get ahead financially by filing your state taxes for free through the state tax board.