Taxation in California
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Taxes in California are collected by state and local governments through a number of tax categories. In total, for fiscal year 2022, California state and local governments together collected an average of $10,319 per capita from residents, the third highest per capita collections in the nation, with the nationwide average being $7,109. California does not have an estate tax or inheritance tax.
Sales tax: As of 2024, a 7.25% state sales tax is imposed on the sale of tangible goods. Unprepared food purchased in grocery stores, soap, medical devices, diapers, and feminine hygiene products are all excluded from sales tax. Local taxes are legislatively capped at an additional 2%, though because over 140 jurisdictions have exemptions to this cap, some cities have a sales tax as high as 11.25%. The average combined state and local sales tax rate is 8.85 percent. Use tax is imposed on the storage, use, or other consumption of tangible personal property purchased from a retailer.
Property tax: Property tax is imposed at a uniform 1% rate of assessed value with annual increases of assessed value restricted to an inflation factor, not to exceed 2% per year due to California's Proposition 13. It prohibits reassessment of a new base year value except in cases of (a) change in ownership, or (b) completion of new construction. People 55 or older can benefit from exemptions. Prop 13 applies equally to all real estate, residential and commercial—whether owned by individuals or corporations. For 2023, the effective property tax rate on owner-occupied housing value was 0.7%.
Income tax: California has a progressive personal income tax system, with rates which range from 1% to 13.3%. The 13.3% rate is the highest in the country, and applies to income over $1 million. Due to this progressivity the state's income tax collections are extremely dependent on high income earners; the top 10% of earners pay 75% of the state's total income tax revenue, (with the top 1% paying 33% and the top 0.1% paying 17%), while the bottom 90% of income earners pay 25%. California's corporate income tax is a flat tax with a rate of 8.84%. Banks and financial institutions are subject to a slightly higher rate of 10.84%.
Other taxes: The state also imposes payroll taxes for unemployment insurance, as well as the state's own disability insurance system. Gasoline is taxed at $0.71 / gallon (in 2025), and the cigarette excise tax is $2.87 / pack.