California is a high-tax state, with some of the steepest sales tax, personal income tax and corporate tax rates in the United States. I PROMISE TO FIND MORE VALUE FOR THE TAXPAYER AND ALWAYS ATTACH ACCOUNTABILITY TO FUNDING.
State Sales Tax: Highest in the Nation
California levies a 7.25 percent general sales and use tax, which is the highest statewide rate in the nation. Local governments are permitted to levy additional sales and use taxes, and the combined rate of the additional local taxes should not exceed 2 percent. However, some local governments have been given special legislative dispensation to go above this cap.
Gasoline Tax: Highest in the Nation
California’s state excise on gasoline is 50.5 cents per gallon, the highest in the nation, as of July 2020. According to the nonpartisan Legislative Analyst’s Office, California’s cap-and-trade auction increases the price of gasoline an additional 11 cents per gallon. The federal excise tax on gasoline adds another 18.4 cents per gallon to the cost at the pump.
Personal Income Tax: Highest in the Nation
California’s personal income tax has the highest top rate and one of the most highly progressive structures in the nation. California’s top rate is 13.3 percent (including the 1 percent surcharge for mental health programs, for all personal income taxpayers with taxable income over $1 million). Hawaii is second, with a top rate of 11 percent. Most small businesses are S Corporations, partnerships, or sole proprietorships, and pay their business taxes at the rates for individuals, which makes California’s taxes on small businesses some of the most burdensome in the nation. Seven states do not impose a personal income tax.
Corporate Income Tax: Highest in the West
Those looking to expand or establish a business in California may resort to neighboring states, as California has the highest corporate tax rate in the Western U.S. at 8.84 percent. Only seven states have a higher top corporate tax rate than California (Alaska, Illinois, Iowa, Maine, Minnesota, New Jersey, and Pennsylvania).