California Money and Tax Research Guide

Why a Sacramento receipt and a Los Angeles receipt disagree

Every taxable sale in California starts at 7.25%. That figure is not one tax but two: a 6% state rate plus a mandatory 1.25% local rate that applies everywhere. On top of that, voters in cities and counties have approved district taxes, each running from 0.10% to 2.00%. More than one district can cover the same street. Stack them and the combined rate can reach 11.25% in the most heavily taxed locations.

The California Department of Tax and Fee Administration, the CDTFA, publishes the rates. Its July 1, 2026 table lists Sacramento at 8.75%, Los Angeles at 9.75%, San Francisco at 8.625% and San Diego at 7.75%. District measures take effect or expire at the start of a calendar quarter, so a rate that was right in March can be wrong in July.

The combined rate depends on where the sale happens or where the goods are delivered or used, so a shop that ships across the state cannot charge one rate to everyone. The CDTFA warns that a ZIP code alone can pick the wrong district, which is why its address-based lookup exists.

Groceries, prescriptions and downloads: what the CDTFA leaves alone

Sales tax applies to tangible goods: furniture, clothing, toys, a new phone. Food products for home consumption are generally exempt, though heated food and restaurant meals are not. Prescription medicines qualify when the statutory conditions are met. Separately stated repair or installation labor is generally not taxed. Neither are purely digital products such as software, e-books or apps delivered without a physical copy.

Buying online does not make a purchase exempt. A seller outside the state must register with the CDTFA and collect California tax once its sales for delivery into California pass $500,000 in the current or prior calendar year. When no tax is collected, the buyer owes use tax at the same rate. Sales tax never shows up on a wage statement; it belongs to a business's own filings, not to payroll.

Nine rates, a 1% surcharge and a bracket table still dated 2025

California's personal income tax runs from 1% to 12.3% across nine brackets. Taxable income above $1,000,000 carries an extra 1% for behavioral health services, so the top marginal rate is 13.3%. The rates are marginal: a single filer whose taxable income reaches the 9.3% bracket pays 9.3% only on the slice above $72,724, with the lower slices taxed at 1%, 2%, 4%, 6% and 8%.

Those thresholds come from the 2025 rate schedule. The Franchise Tax Board indexes the brackets every year. As of August 2026 it had not published the final 2026 amounts. Its own 2026 estimated tax instructions tell filers to use the 2025 table, so the 2025 figures are the working numbers for now.

The standard deduction is small by federal standards: $5,706 for single filers and $11,412 for joint filers on the 2026 estimated tax worksheet. That gap is why state taxable income usually runs higher than federal taxable income on the same salary. Capital gains get no special rate; they are taxed as ordinary income. Nonresidents and part-year residents report the California portion on Form 540NR. Wages count as California income only for work physically performed in the state.

Myth and fact: the SDI wage ceiling

Myth: State Disability Insurance stops coming out of your check once your wages pass a cap, the way Social Security does.

Fact: Senate Bill 951 removed the SDI taxable wage ceiling on January 1, 2024. In 2026 the rate is 1.3% on every dollar of wages. Social Security, by contrast, is 6.2% only up to $184,500, after which it stops. Medicare continues at 1.45% with a further 0.9% above $200,000 for a single filer.

SDI is paid entirely by the employee and funds Disability Insurance and Paid Family Leave. The Employment Development Department, which also handles employer-side Unemployment Insurance at 1.5% to 6.2% on the first $7,000 and the 0.1% Employment Training Tax, expects SDI to appear as its own labeled line on the wage statement rather than being folded into a generic state tax row.

Two weeks of pay for a dental hygienist assistant in Sacramento

Take a dental hygienist assistant in Sacramento earning $32 an hour, working 40 hours a week and paid every two weeks as a single filer. Federal withholding follows the W-4. State withholding follows Form DE 4 and the EDD's DE 44 schedules. SDI takes its 1.3% off the top. Online Paystub's California paycheck calculator produced the figures below.

Figures come from the Online Paystub California paycheck calculator for 2026. Local taxes, health premiums and retirement contributions are not included.

Notice that the state line does not equal one twenty-sixth of an annual bracket calculation. Withholding schedules approximate the year; the annual return settles it. Notice also that SDI sits on its own line, separate from state income tax, which is how the EDD wants it shown.

Daily overtime, local wage floors and the statement's nine lines

The statewide minimum wage is $16.90 an hour for employers of every size. More than 40 cities and two counties set higher floors, topping out at $20.34 in Emeryville. Where the work is physically done decides which rate applies, remote workers included. Fast food at large chains has its own $20.00 floor under AB 1228. Covered healthcare facilities run from $23.00 to $25.00. An exempt salaried employee must earn at least $70,304 in 2026, twice the state minimum for full-time work.

Overtime here is daily as well as weekly: time and a half after 8 hours in a day or 40 in a week, double time after 12 hours in a day. Most employees must be paid at least semimonthly. A fired employee gets the final check immediately; one who quits without notice gets it within 72 hours. Unused vacation is earned wages and must be paid out.

Labor Code Section 226(a) requires nine items on every wage statement, from gross wages and total hours to each hourly rate and the pay period dates, with available paid sick leave shown under AB 1522. A first violation costs $50 per employee, later ones $100, capped at $4,000. Records must be kept three years. Employers building those statements from real payroll data can use the California pay stub generator. Decoding an existing statement is easier with a list of common abbreviations.