California Income
Tax Rates & Rules

California income tax uses a progressive rate system, which means the tax rate increases as taxable income moves through higher brackets. California has nine regular individual income tax rates ranging from 1 percent to 12.3 percent. An additional 1 percent Behavioral Health Services Tax applies to taxable income above $1 million, bringing the maximum marginal rate on that portion of income to 13.3 percent.

Your actual California state income tax depends on more than your earnings alone. Filing status, California adjusted gross income, deductions, credits, residency status and the source of your income can all affect the final amount.

How Does California Income Tax Work?

California applies marginal tax rates to taxable income rather than charging one rate on all income. Each portion of taxable income falls into a particular tax bracket, so reaching a higher bracket does not cause all of your income to be taxed at the higher percentage.

California has its own individual income tax system. It does not simply copy federal tax rates or the federal standard deduction. California also makes its own adjustments when determining state taxable income.

A simplified California income tax calculation generally follows this process:

• Determine income that must be reported to California.
• Calculate California adjusted gross income.
• Apply the standard deduction or eligible itemized deductions.
• Determine California taxable income.
• Apply the appropriate marginal tax rates.
• Apply eligible California tax credits.
• Add other applicable taxes.
• Subtract withholding or estimated tax payments.

Residents, part-year residents and nonresidents can follow different rules for determining how much income California may tax.

What Is the California Income Tax Rate in 2026?

California individual income tax rates currently range from 1 percent to 12.3 percent. Taxpayers with taxable income above $1 million can also owe an additional 1 percent Behavioral Health Services Tax on the amount above that threshold.

The regular California rate structure includes:

These are marginal rates. For example, entering the 9.3 percent bracket does not mean that all taxable income is taxed at 9.3 percent. Lower portions of income remain subject to the lower rates assigned to those brackets.

California Income Tax Brackets for 2026

California's final annual income tax bracket thresholds for tax year 2026 are not yet listed on the Franchise Tax Board's public tax calculator and annual rate schedule page as of August 19, 2026. The FTB currently lists 2025 as the latest available annual tax table and rate schedule.

This distinction matters because California indexes its state income tax brackets annually. The final dollar thresholds can therefore change from one tax year to the next. The FTB's 2026 estimated tax instructions currently tell taxpayers to use the 2025 tax table when estimating 2026 tax.

For that reason, 2025 bracket thresholds should not be relabeled as final California income tax brackets for 2026. This page will need the final 2026 thresholds once the FTB publishes its annual 2026 rate schedules.

The underlying rate structure remains important for planning. California has individual income tax rates from 1 percent through 12.3 percent plus the additional 1 percent tax on taxable income above $1 million.

How Is California Taxable Income Calculated?

California taxable income generally begins with income information used for tax purposes then applies California-specific adjustments and allowable deductions. California does not conform to every federal income, deduction or credit rule.

A basic calculation can be expressed as:

California Adjusted Gross Income - California Deductions = California Taxable Income

Taxable income is different from gross salary. An employee earning $80,000 does not automatically pay California tax as though the entire $80,000 were taxable at one rate.

California adjustments can cause state adjusted gross income to differ from federal adjusted gross income. The amount can also change based on residency, income source and deductions allowed under California law.

What Is the California Standard Deduction for 2026?

For 2026 estimated tax calculations, the Franchise Tax Board currently instructs taxpayers who do not itemize to use $5,706 for single or married/RDP filing separately and $11,412 for married/RDP filing jointly, head of household or qualifying surviving spouse/RDP. The same 2026 estimated tax worksheet instructs taxpayers to use the 2025 tax table when estimating tax.

These amounts should be understood in the context of the 2026 estimated tax worksheet. They should not be presented as newly indexed final 2026 annual return amounts until the FTB publishes the final tax-year materials.

California also allows itemized deductions in qualifying cases. State rules do not match federal itemized deduction rules in every situation, so taxpayers should use California-specific guidance when deciding between the standard deduction and itemizing.

How Is California Income Tax Withheld From a Paycheck?

California employers generally withhold state personal income tax from employee wages based on the employee's state withholding information and applicable withholding schedules. California uses Form DE 4 for state withholding adjustments. Form DE 4 is separate from federal Form W-4.

The amount withheld during a pay period is an advance payment toward the employee's California income tax. Withholding is not necessarily the same as final annual tax liability.

An employee may have more tax withheld than the final amount owed, which can contribute to a refund. Another employee may have too little withheld and owe additional tax when filing.

The effect of California withholding on actual take-home pay is easier to see through aCalifornia paycheck calculator, where state withholding can be considered alongside federal income tax, Social Security, Medicare and other payroll deductions.

Who Has to File a California State Income Tax Return?

A California filing requirement can apply to residents, part-year residents or nonresidents depending on federal filing requirements, California-source income and income thresholds. The Franchise Tax Board advises taxpayers to review all of these factors when determining whether a California return is required.

Full-year California residents are generally subject to California tax on income regardless of where it was earned. Nonresidents can have a filing requirement when they receive taxable income from California sources. Part-year residents can be taxed under both resident and nonresident rules for different portions of the year.

A person may also choose to file even when a return is not otherwise required. For example, filing may be necessary to claim a refund of California income tax that was withheld from a paycheck.

How Does California Tax Residents, Part-Year Residents and Nonresidents?

California residents generally pay state income tax on income from all sources while they are residents. Part-year residents generally pay California tax on worldwide income received while they were California residents plus California-source income received while they were nonresidents. Nonresidents generally pay California tax only on taxable income sourced to California.

California-source income for a nonresident can include:

• Compensation for services physically performed in California.
• Rent from real property located in California.
• Income from a California business, trade or profession.
• Gain from certain California real property transactions.

Part-year residents and nonresidents generally use Form 540NR to report the California portion of their income. California uses a specific calculation method that considers California taxable income and an effective tax rate based on total taxable income.

Does California Tax Remote Workers?

California can tax remote workers when their compensation is considered California-source income, but the answer depends on residency and where services are performed. A California employer alone does not automatically make every dollar of a nonresident employee's wages taxable by California.

For example, the FTB explains that a former California resident who moves to another state but periodically returns to California to perform services can have California-source wage income for the work performed in California. A nonresident employee who performs all services outside California will generally not have California-source wages from those services, although deferred compensation and equity-based compensation can require separate analysis.

Independent contractors face different sourcing considerations. The FTB states that California-source income for an independent contractor or sole proprietor can depend on where the customer receives the benefit of the service rather than only where the contractor physically performs the work.

Residency questions become especially important after relocation. People changing states can review the separate guidance on moving out of California tax rules for more detail on residency, California-source income and continuing state tax obligations.

Does California Tax Capital Gains?

California generally taxes capital gains using the same individual income tax rates that apply to ordinary income. The state does not provide separate preferential individual tax rates for net capital gains.

This differs from the federal system, where qualifying long-term capital gains can receive separate federal tax rates.

For California purposes, taxable capital gains can therefore move a taxpayer through the state's regular marginal income tax brackets. Residency and sourcing rules can also matter when a person sells property, stock or another asset after changing residency.

Who Must Make California Estimated Tax Payments in 2026?

A taxpayer generally needs to consider California estimated tax payments for 2026 when the expected tax owed after withholding and credits is at least $500, or $250 for married/RDP filing separately and withholding plus credits are below the required safe-harbor amount.

The standard test compares withholding and credits with the smaller of:

• 90 percent of the tax shown on the 2026 California return.
• 100 percent of the tax shown on the 2025 California return, including Alternative Minimum Tax.

Different rules apply to some higher-income taxpayers. If 2025 California adjusted gross income exceeded $150,000, or $75,000 for married/RDP filing separately, the prior-year component generally increases to 110 percent. Taxpayers with 2026 California adjusted gross income of at least $1 million, or $500,000 for married/RDP filing separately, must base estimated tax on the current year's tax under the FTB rules.

When Are California Estimated Tax Payments Due in 2026?

California uses four estimated tax payment dates for 2026, but the percentages are not divided into four equal installments. The state assigns 30 percent to the first installment, 40 percent to the second, zero percent to the third and 30 percent to the fourth.

Taxpayers should use Form 540-ES and the California Estimated Tax Worksheet when determining whether estimated payments are required.

California Income Tax vs. Payroll Taxes

California income tax is only one tax that may be connected with a paycheck. Employees can also have federal income tax, Social Security, Medicare and California State Disability Insurance associated with their wages.

These deductions serve different purposes. California Personal Income Tax is part of the individual's state income tax system. Social Security and Medicare are federal payroll taxes. California State Disability Insurance funds state disability and paid family leave programs.

Keeping these categories separate is important when reviewing payroll records. ACalifornia pay stub can show gross earnings, California income tax withholding, federal payroll taxes, other deductions and net pay for the relevant pay period. State income tax withholding should not be treated as the employee's entire payroll tax burden.

Need to Organize Your Payroll Records?

Accurate payroll records make it easier to review gross wages, tax withholding, deductions and net pay. If you need to turn genuine payroll information into an itemized document, you can use ourpaystub maker to organize the information and create a professional pay stub.

Online PayStub is intended for lawful payroll, business and recordkeeping purposes. Earnings, employer information, employee information, deductions and tax amounts should reflect genuine payroll records.