California is an expensive place to live and the high cost of living is often balanced out by the state's relatively high salaries. California income tax rates depend on the annual income of the taxpayer and the filing status they choose. The state income tax rates in California are progressive, meaning the more money you make, the higher the rate of income tax you will pay. In 2023, the top rate of income tax in California will be 12.3%.
2023 California Income Tax Rates
In 2023, the income tax rate for California taxpayers will be broken down into nine brackets. The lowest tax rate is 1.0% for taxpayers who make less than $8,223 annually. The second tax bracket is 2.0%, for earners who make between $8,223 and $19,495. The third tax bracket is 4.0%, for those who make between $19,495 and $30,769. The fourth tax bracket is 6.0%, for those who make between $30,769 and $42,711. The fifth tax bracket is 8.0%, for those who make between $42,711 and $53,980. The sixth tax bracket is 9.3%, for those who make between $53,980 and $268,750. The seventh tax bracket is 10.3%, for those who make between $268,750 and $322,499. The eighth tax bracket is 11.3%, for those who make between $322,499 and $537,498. The ninth and highest tax bracket is 12.3%, for those who make more than $537,498.
Standard Deduction in 2023
The standard deduction in California for 2023 will be $4,537 for single filers and $9,074 for those filing jointly. This is the amount that can be deducted from taxable income before calculating income tax. Those who are over 65 or blind may qualify for an additional deduction. Married couples filing jointly may also qualify for an additional deduction for each spouse.
Exemptions and Credits
California residents may also be eligible for certain exemptions and credits to lower their tax burden. Exemptions are deductions from taxable income that are available to taxpayers who meet certain criteria. Credits are either refundable or non-refundable and can be used to reduce the amount of tax owed. Some of the most common exemptions and credits in California include the dependent exemption, the child and dependent care credit, the child tax credit, the earned income credit, and the elderly and disabled credit.
Taxable Income
The taxable income for California residents in 2023 is determined by subtracting deductions and exemptions from gross income. Gross income is all income from any source, including wages, salaries, dividends, alimony, capital gains, and rental income. Taxable income can also be reduced by certain credits, such as the earned income credit or the child tax credit.
Filing Status
The filing status chosen by a taxpayer can also affect the amount of income tax they owe. Married couples filing jointly will pay a lower rate than those filing separately. Those who are single and have dependents may be able to file as head of household. Separately, those who are over 65, blind, or disabled may be able to file as a qualifying widow or widower.
Payment Options
California residents who owe income tax must make a payment before the April 15th due date. Taxpayers can make a payment in person, by mail, or online. Those who cannot pay the full amount of tax due by the due date may be able to set up a payment plan with the California Franchise Tax Board.
Conclusion
Understanding California income tax rates in 2023 can help taxpayers plan for their future. The state income tax rate is progressive, meaning that the more money a taxpayer makes, the higher their rate of income tax. Additionally, certain deductions, exemptions, and credits can be used to reduce the amount of tax a taxpayer owes. Lastly, taxpayers should be aware of their filing status and payment options.
