8 Things California Taxpayers Need To Know Before Filing in 2024

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

Before the 2023 tax deadline approaches, dive into this guide to understanding your state tax rates and uncovering 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).

California calculates individual income tax based on residents’ tax brackets, which are based on how much income you earned over the 2023 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 $10,412: 1% tax rate
• Between $10,413 and $24,684: 2% tax rate
• Between $24,685 and $38,959: 4% tax rate
• Between $38,960 and $54,081: 6% tax rate
• Between $54,082 and $68,350: 8% tax rate
• Between $68,351 and $349,137: 9.3% tax rate
• Between $349,138 and $418,961: 10.3% tax rate
• Between $418,962 and $698,271: 11:3% tax rate
• $698,272 and higher: 12.3% tax rate

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 $20,824: 1% tax rate
• Between $20,825 and $49,368: 2% tax rate
• Between $49,369 and $77,918: 4% tax rate
• Between $77,919 and $108,162: 6% tax rate
• Between $108,163 and $136,700: 8% tax rate
• Between $136,701 and $698,274: 9.3% tax rate
• Between $698,275 and $837,922: 10.3% tax rate
• Between $837,923 and $1,396,542: 11.3% tax rate
• $1,369,543 and higher: 12.3% tax rate

Individuals making over $1 million are also subject to an additional 1% tax.

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 2023 tax year, the effective California property tax rate was 0.75%. With a median housing price of around $715,900 last year, the median amount of state property taxes paid will be $5,347.48 per property. 

Note that the median housing price data listed here comes from the 2022 tax year.

Did you sell any investments at a profit in 2023? 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.

California has some of the highest fuel taxes in the nation, second only to Pennsylvania. The average fuel tax in the country at large is 29.15 cents per gallon — but California’s average was 54 cents per gallon last year.

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.

Sales tax rates vary by city and county. If you live in California and want to calculate your exact sales tax, you’ll want to visit the California Department of Tax and Fee Administration’s website and enter your address to find your area’s average sales tax rate.

However, between January 2017 and January 2024, the state sales tax rate was 6% while the average local tax rate was 1.25%, bringing the average sales tax rate to 7.25%.

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 35th 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.