According to the Tax Foundation*, Californians pay some of the highest taxes in the nation. In fact, the top marginal income tax rate in California is 13.3 percent, with the state also imposing high sales and property taxes.
While it’s true that the residents of California pay some of the highest taxes in the United States, it’s important to remember what we get in return. Californians benefit from an excellent public school system, good local infrastructure – from roads to natural gas lines to broadband – and much more. The tax rate may be higher than that of other states, but you get what you pay for, and here in California, we get a great deal for our money. It might be difficult to fit the added expenses into your budget each year, but taking stock of all that’s provided may put your worries at ease.
So what are taxes like in California? Let’s take a closer look.
Residents of California pay state income tax, sales tax, and property tax.
With one of the highest marginal income tax rates in the nation, California residents are familiar with writing hefty checks to state government coffers each year. The state income tax rate varies depending on how much money you bring in. Starting at 1%, the rate steadily increases with larger incomes until it maxes out at 13.3%. It’s important for anyone who works here to understand the ins and outs of this system, from filing deadlines to which bracket you fall into.
But those dreaded income tax payments don’t tell the entire story – when it comes to tax policies, California doesn’t stop with just income taxes. If you live in California you can expect to see an average rate of 0.77% for your property taxes, depending on where in the state you choose to settle.
Sales and property taxes take a big bite out of Californian’s wallets as well. Living in California means earning a living in one of the highest-taxed states in the nation. The statewide tax rate for California is currently 7.25%, topping off at nearly 8% depending on where you live in the state. On top of that, extra district taxes can add even more to your total bill and range from 0.10% to 1.00%. These extra taxes can really stack up and make an already steep tax rate even steeper, which is why it’s so important for Californians to stay on top of their financial situation and be aware of how much they owe when it comes to taxes.
California tax breakdown by city
If you’re braving life in California, then you have to steel yourself against these heftier-than-average taxes – if you’ve done your research and prepared correctly though, there are ways to ease some of this financial strain.
Los Angeles taxes
Los Angeles property taxes are considered high when compared to some other areas of the country. The median property tax rate is 1.17%, which is above the national average of around 1%.
The total sales and usage tax in LA is 9.5%. This is a combination of the statewide base tax of 6%, plus additional district taxes for Los Angeles.
San Francisco Taxes
Known for being one of the most expensive housing markets in the U.S., you can be sure the average property tax bill in San Francisco is steep. In 2022, the San Francisco property tax rate came in at just over 1.18%.
Sales and usage tax in San Francisco is a little easier on the wallet than Los Angeles, coming in at 8.625%. This consists of a 6% California state sales tax, 0.25% San Francisco County sales tax, and 2.375% special tax for the city.
San Diego taxes
The current property tax rate in San Diego is 0.73 percent, which is actually lower than the national average, making it one of the more affordable rates in California.
The minimum combined 2022 sales tax rate for San Diego is also lower than its neighboring cities at just 7.75%. This consists of a 6% California state sales tax, a county sales tax rate of 0.25%, and a 1.5% special tax for the city.
Sacramento taxes
Sacramento has one of the highest median property tax rates in the country, and you can expect to pay an average rate of 0.81%.
San Jose taxes
San Jose, located in Santa Clara county, sees average property tax rates of around 0.73%, keeping in line with the rates seen in San Diego.
However, San Jose sees a larger jump when it comes to sales and usage taxes. The minimum combined rate of 9.38%, which accounts for the city, state, and county level taxes, is almost as high as Los Angeles.
Oakland taxes
Oakland, the largest city in Alameda County, has an average property tax rate of 0.78%, just higher than the national average.
State and usage taxes in Oakland are high as well. You can expect to pay a minimum combined rate of 10.25%, which consists of a 6% California state sales tax, a 0.25% Alameda County sales tax, and a 4% special tax.
Get help with California taxes
With all of these complicated tax rules, you can easily find yourself in debt to the state or federal government. That’s why it’s so important to work with a tax professional who understands California taxes and can help you navigate the system. At Tax Law Advocates, we have a team of experts who can help you with your tax problems. We can help you get out of tax debt and make sure you stay compliant with all the California tax rules. Contact us today.
Resources:
- Tax Foundation – https://taxfoundation.org/state/california/
- State of California tax website – https://www.taxes.ca.gov