The facts on California’s Tax Climate

  • 10.3%
    individual income tax
    top rate
  • 8.84%
    corporate income tax
    flat rate
  • 7.25%
    sales tax
  • $1,465
    property tax
    collections per capita

California’s Top Individual Income Tax Rate Is Second Highest in the Nation
With seven brackets and a top rate of 10.3 percent for those earning over $1,000,000, California’s individual income tax has the second highest rate and one of the most highly progressive structures in the nation. In 2010, California’s state-level individual income tax collections were $1,229 per person, which ranked 5th highest nationally. Since most small businesses are S Corporations, partnerships, or sole proprietorships, they pay their business taxes at the rates for individuals. That makes California’s taxes on small businesses some of the most burdensome in the nation.
50-State Table of Individual Income Tax Rates

50-State Table of State Individual Income Tax Collections

50-State Table of State and Local Individual Income Tax Collections Per Capita

Tax Freedom Day Arrives on April 20 in California

Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2012, California taxpayers work until April 20 (ranked 11th nationally) to pay their total tax bill. The Tax Freedom Days of neighboring states are: Oregon, April 15 (ranked 21st nationally); Nevada, April 18 (ranked 14th nationally); and Arizona, April 10 (ranked 35th nationally).

California’s State and Local Tax Burden Above National Average

California’s 2009 state and local tax burden of 11.8% of income is above the national average of 9.8%. California’s tax burden has decreased overall from 11.8% (5th nationally) in 1977 to 10.6% (6th nationally) in 2009. Californians pay $4,910 per capita in state and local taxes.
California’s State and Local Tax Burden, 1977-present
Other States’ State/Local Tax Burdens
Map of U.S. Showing all State’s Burdens and Ranks
Historical Chart Comparing All States’ State/Local Tax Burdens from 1977 to 2009

California’s 2013 Business Tax Climate Index Ranks 48th

California ranks 48th in the Tax Foundation’s State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Oregon (13th), Nevada (3rd), Arizona (25th), and Hawaii (37th).

50-State Comparison of Business Tax Climates (data only)
2013 State Business Tax Climate Index (full study)