State Tax Laws - California

Tax rates in the Golden State range from 1% to 13.3% in the top bracket… hope they give a lot of gold back for demanding that! California has a standard deduction of $3,841 single and $7,682 married filing joint and they also have small personal exemptions and individual credits that apply. Social security benefits are exempt but all pensions are fully taxed.California also adds a 2.5% penalty tax on early distributions from pension funds. California has a refundable Child and Dependent Care Credit. There is no separate estate tax, just a minimal amount that piggy-backs off the federal.

One of the most avaricious states, California makes it rather difficult to move abroad. They consider those who move out of the state still residents unless they have fully severed ties, and will hunt former residents down around the world to send tax bills.

California has sky-high corporate tax rates, with an $800 minimum tax for all business entities doing business in the state. C-corps pay an 8.84% tax rate, S-corps pay a 1.5% tax rate, although financial corporations of either type pay even higher. LLC’s are taxed at the corporate rate of 8.84% with the $800 minimum tax. Sales tax is a minimum of 7.5% and can be up to 3.5% higher in localities.

Also it is important to note that some California cities have steep city tax rates based on gross receipts, often due even if the company reports a net loss. City of LA has an income tax that varies based on the type of business, ranging from $1.01 $5.07 per $1,000 of gross income. San Francisco has flat taxes that range from $75 to $30,000, also based on total gross receipts. 

Additional tax information can be found at: https://www.ftb.ca.gov/index.shtml The California business portal is at: http://www.sos.ca.gov/business/


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