California State Income Taxes: 2023-2024 Tax Brackets and How To Calculate What You’ll Owe

Californians pay the highest marginal state income tax rate in the country — 13.3%, according to Tax Foundation data. But California has a graduated tax rate, which means your rate increases with your income. The specific rate you pay depends on your tax bracket.

Keep reading to learn more about California state income tax brackets and how to calculate how much you’ll owe.

See Also: What To Do If You Owe Back Taxes to the IRS

What Is a Tax Bracket?

Tax brackets break down your taxable income down into layers, and apply a certain tax rate to each layer. The rate is expressed as a percentage. California’s tax rates are graduated, so that percentage increases with each additional layer of taxable income.

Your tax bracket applies only to your highest level of taxable income. Consider this (greatly simplified) hypothetical example:

• $1 to $10 of income: 1% tax bracket

• $11 to $19 of income: 2% tax bracket

• $20 or more: 3% tax bracket

Now imagine you have $30 of taxable income, which puts you in the 3% tax bracket. Your first $10 would be taxed at 1% ($0.10). Your next $10 would be taxed at 2% ($0.20). And your last $10 would be taxed at 3% ($0.30). This graduated, or progressive, method of taxation helps to ensure that people who earn more taxable income pay more income tax.

What Are California’s Income Tax Brackets?

California has three different sets of tax brackets for taxpayers with more than $100,000 of taxable income. Which set you use depends on your filing status:

• Schedule X tax brackets are for single taxpayers and married taxpayers filing separate returns.

• Schedule Y tax brackets are for married taxpayers filing joint returns or filing as a qualifying surviving spouse.

• Schedule Z tax brackets are for taxpayers filing as head of household.

Filing statuses that apply to married individuals, including qualifying surviving spouse, also apply to individuals in registered domestic partnerships.

Schedule X

Use the Schedule X table below if you’re single or are married but you and your spouse are filing separate returns.

Schedule Y

Use this Schedule Y if you and your spouse are filing a joint return or if you’re filing as a qualifying surviving spouse.

Schedule Z

Use these Schedule Z tax brackets if you’re filing as head of household.

Taxpayers with taxable income of $100,000 or less don’t have tax brackets, per se. Although these individuals are also taxed on a graduated basis, the tax is a flat amount from the California Tax Table, which lists hundreds of small income ranges, such as $0 to $50, and assigns a tax amount to each. The highest tax amount, for a single filer (or married filing separately) is $5,951 for the $99,951 to $100,000 income range.

What Is Taxable Income in California?

Your California taxable income is your federal adjusted gross income after California-specific adjustments. This includes income from various sources such as wages, salaries, dividends, interest, rental income and capital gains. However, it excludes certain types of income, such as FICA taxes withheld from your paycheck and certain types of capital gains tax exemptions.

Federal Adjusted Gross Income

Federal adjusted gross income is your all of the income you receive, less adjustments like:

• Educator expenses

• Health savings account contributions

• Student loan interest

• Alimony

• Retirement contributions

Your federal AGI is the amount you enter on line 11 of your IRS Form 1040.

California Adjusted Gross Income

The figure on line 11 of your IRS Form 1040 gets transferred over to line 13 of your California state tax return Form 540. But California’s tax laws differ from federal laws, so you might have to adjust your federal AGI to reflect California tax laws when you calculate your California AGI. That’s true whether you take the standard deduction or itemize deductions.

The federal standard deduction for tax year 2023 is:

• $13,850 for single taxpayers and married taxpayers filing separate returns

• $20,800 for heads of household

• $27,700 for married taxpayers filing a joint return

California allows the standard deduction for qualifying widows and widowers as well as for the other all filing statuses, but its deductions are lower:

• $5,363 for single filers and married taxpayers filing single returns

• $10,726 for married taxpayers filing jointly, heads of household and qualifying widow(er)s

If you itemize, you might have to make adjustments on the following deductions that differ from IRS tax deductions:

• State and local taxes

• Foreign income tax

• Home mortgage interest

• Mortgage interest credit

• Mortgage insurance premiums

• Charitable contributions

• Unreimbursed impairment-related work expenses

• Investment interest expenses

• Gambling losses

• Federal estate tax

• Adoption-related expenses

• Alimony

Schedule CA (540), which you’ll attach to Form 540, walks you through making those adjustments.

Who Must File a California Income Tax Return?

Whether you’re a full-time resident, part-time resident or nonresident, you must file a California state tax return if the following apply to you:

• You’re required to file a federal income tax return.

• You receive income from a California source.

• Your income exceeds the thresholds for California gross income and California adjusted gross income.

Which form you file depends on whether you’re a resident, part-year resident or nonresident. Your residency also affects the types of income the state taxes, so it’s a good idea to review FTB Publication 1031, 2023 Guidelines for Determining Resident Status, before you file if you live outside of California for any part of the year. The publication explains the factors that determine your residency status, such as how much time you spend in California, where your spouse and/or children live, which state issued your driver’s license and voter’s registration and where you keep your bank accounts.

You’re considered a resident if you’re in California for something other than a “temporary or transitory” purpose — or your home is in California but you’re located outside of the state on a temporary or transitory basis. In that case, you file Form 540 or Form 540EZ.

The state considers you a part-year resident if you live in California for part of the year, and a nonresident if you don’t live in California at all. Part-year residents and nonresidents file California state income taxes using Form 540NR.

California Gross Income

Gross income is the first test to determine whether you have to file a state tax return. For this purpose, anyone who turns 65 by Jan. 1, 2024, is considered to have been age 65 by the end of 2023.

• Single or head of household

  • 0 dependents: $21,561 ($28,761 if age 65 or older)

  • 1 dependent: $36,428 ($39,911 if 65 or older)

  • 2 or more dependents: $47,578 ($48,831 if 65 or older)

• Married filing jointly or separately

  • 0 dependents: $43,127 ($50,327 if one spouse is 65 or older, $57,527 if both spouses are 65 or older)

  • 1 dependent: $57,994 ($61,477 if one spouse is 65 or older 65, $68,677 if both spouses are 65 or older)

  • 2 or more dependents: $69,144 ($70,397 if one spouse is 65 or older, $77,597 if both spouses are 65 or older)

• Qualifying surviving spouse

  • 0 dependents: $0 regardless of age

  • 1 dependent: $32,116 ($35,599 if age 65 or older)

  • 2 or more dependents: $43,266 ($44,519 if age 65 or older)

California Adjusted Gross Income

If your income meets the gross income test, check it against the second test, which is California adjusted gross income. You must file if your income reaches or exceeds these thresholds:

• Single or head of household

  • 0 dependents: $17,249 ($24,449 if age 65 or older)

  • 1 dependent: $32,116 ($35,599 if age 65 or older)

  • 2 or more dependents: $43,266 ($44,519 if age 65 or older)

• Married filing jointly or separately

  • 0 dependents: $34,503 ($41,701 if one spouse is 65 or older, $48,903 if both spouses are 65 or older)

  • 1 dependent: $49,370 ($52,853 if one spouse is 65 or older, $60,053 if both spouses are 65 or older)

  • 2 or more dependents: $60,520 ($61,773 if one spouse is 65 or older, $68,973 if both spouses are 65 or older)

• Qualifying surviving spouse

  • 0 dependents: $0 regardless of age

  • 1 dependent: $32,116 ($35,599 if 65 or older)

  • 2 or more dependents: $43,266 ($44,519 if 65 or older)

Even if you don’t owe California state income tax and are not required to file, filing is the only way to claim the California Earned Income Tax Credit. The credit is worth up to $3,529 if you’re eligible.

How To Calculate Your California State Income Tax

The easiest way to calculate your California state income tax is to go to the state Franchise Tax Board’s CalFile website, located here, and file your return online for free.

If you’d rather prepare your return manually, follow these steps to calculate your tax.

1. Find the correct tax return form for your situation. California residents use Form 540, although some taxpayers can use the simpler 540 EZ

2. Have your completed IRS Form 1040 handy — you’ll need it to complete your state return.

3. Fill out Schedule CA (540) to calculate California adjustments to your federal adjusted gross income.

4. Complete the first page of Form 540 with your personal information and information about your residence, filing status and personal exemption.

5. On the next page, enter your dependents’ information and follow the instructions for calculating your dependent exemptions.

6. Next, enter your taxable income as instructed in lines 12 through 19.

7. In the Tax section that follows, check the box indicating which you’ll use: the tax table (if your income is $100,000 or under) or the tax rate schedule (tax brackets).

8. Follow the instructions to subtract your personal and dependent exemptions from your tax amount.

9. Complete the next two sections for claiming special credits and adding other taxes. Line 64 in the Other Tax section is your tax calculation.

10. The next section lets you adjust your income by claiming payments you’ve already made or credits you’re owed. Complete that and the subsequent section, for use tax.

11. Fill in line 92 to report whether you had health insurance for the full year.

12. Lines 93 through 100 are for making the final calculations. Follow the instructions to determine the amount of tax (as shown on line 64) you’ve overpaid or still owe.

When Are California State Income Taxes Due?

April 15 is the due date for filing a 2023 California state tax return and paying any state income tax you owe — it’s the same as the due date for filing your federal tax return and paying your federal taxes.

California grants automatic six-month extensions for filing returns but not for paying tax owed. So if you know how much you owe, you can pay your tax by April 15 and file your return by October 15. You can also use the extension if you don’t owe, but if you’re due a refund, you won’t receive it until after you file your return.

FAQ

Understanding how California income tax works will help you avoid unpleasant surprises come tax day.

• Is California a high income tax state?

  • Yes. California residents pay a marginal tax rate of 13.3%, which is the highest state tax rate in the country.

• How much is $100,000 after taxes in California?

  • Considering state taxes only, paying taxes on $100,000 of taxable income (adjusted gross income) would leave a single taxpayer or married taxpayer filing separately with $94,049, according to the state's tax table. However, you'd also owe federal income tax.

• How much is $300,000 after taxes in California?

  • Considering state taxes only, paying taxes on $300,000 of taxable income (adjusted gross income) would leave a single taxpayer or married taxpayer filing separately with $275,447.15. $300,000 is in the 9.30% tax bracket. Tax in that bracket is $3,009.40 plus 9.30% of income above $68,350. Here's how to calculate it:

    1. $300,000 - $68,350 = $231,650

    2. 9.30% of $231,650 = $21,543.45

    3. $21,543.45 + $3,009.40 = $24,552.85

    4. $300,000 - $24,552.85 = $275,447.15

This article originally appeared on GOBankingRates.com: California State Income Taxes: 2023-2024 Tax Brackets and How To Calculate What You’ll Owe