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Which California tax brackets have the highest income tax rates?
Executive summary
California’s top statutory income tax rate is 12.3% and an additional 1% mental‑health services surtax applies to taxable income over $1 million, producing an effective top marginal rate of 13.3% for millionaires [1] [2]. State reporting and tax analysts consistently describe California as having multiple progressive brackets (nine commonly cited) with rates spanning low single digits up to the 12.3% top rate before the surtax [1] [3].
1. How California’s top rates are structured — what pays 13.3%
California uses a progressive bracket schedule: ordinary taxable income is taxed across multiple marginal rates that rise with income, with the statutory top marginal rate at 12.3% for the highest bracket; on top of that, incomes above $1 million face a separate 1% Mental Health Services Tax, bringing the top marginal exposure to 13.3% for those taxpayers [1] [2]. Tax guides and state comparisons repeatedly flag that the 1% surcharge applies only once taxable income crosses the $1 million threshold [4] [2].
2. How many brackets and the overall range
Most practical guides and tax‑prep companies list nine state tax rates for California, and describe the rate range as roughly 1% at the bottom to 12.3% at the top (not counting the millionaire surcharge) — the nine‑bracket description is repeated in consumer guides and H&R Block’s state pages [1] [5]. Some explainers update thresholds annually for inflation or legislative changes, so the count of brackets (nine) and the rate endpoints (1%–12.3%) are the consistent headline numbers [1] [5].
3. Who pays the highest rates — the $1 million+ cohort
Multiple outlets note that the highest effective marginal burden hits taxpayers with more than $1 million in taxable income because that’s when the 1% mental‑health surcharge kicks in; that group therefore faces the state’s maximum effective marginal rate of 13.3% [4] [6]. Advocacy and business groups emphasize that high‑income Californians supply a disproportionate share of General Fund revenue, and they point to the 14.4% “all‑in” figure only when combining the state top rate with certain payroll taxes — but the widely cited personal top marginal rate is 13.3% (state 12.3% + 1% surtax) [7] [8].
4. Variations by filing status and yearly adjustments
Bracket thresholds differ by filing status (single, married filing jointly, head of household, etc.), so exactly which incomes hit which marginal rates depends on your filing category; tax‑prep and advisory sites publish separate tables for each status [5] [9]. Many guides caution that thresholds are adjusted annually for inflation unless a legislative change suspends indexing; commentators noted in 2025 that some bills and budget choices could pause or alter indexing, which affects whether taxpayers are pushed into higher brackets over time [10] [11].
5. How California compares with other states
Comparative trackers and the Tax Foundation show California’s top‑marginal rate among the highest in the nation — often labeled the highest top marginal statutory rate at 13.3% (including the surcharge) with other high‑tax states like Hawaii and New York having lower top rates [12] [6]. The Tax Foundation and Tax Competitiveness Index also point to ancillary features (like payroll taxes, AMT, and conformity timing) that can increase effective burdens and complexity beyond the headline marginal rates [8].
6. Policy context and competing viewpoints
Proponents of California’s progressive rates (including state fiscal analysts) argue high top rates fund major public programs and shift the tax burden onto those best able to pay; critics (business groups and some advocacy coalitions) frame the top rates as a competitiveness problem and stress that high‑income taxpayers shoulder much of the General Fund, arguing this could deter investment or migration [7] [4]. Legislative activity in 2025 (proposals like AB1219 and SB 711 referenced in reporting) indicates ongoing political debate over bracket design, indexing and conformity to federal rules, so the rate picture can change with enacted laws [13] [14].
7. What this means for taxpayers and where to get authoritative numbers
For most taxpayers, the relevant takeaway is the headline range (1%–12.3%) and the millionaire surcharge to 13.3% for very high incomes, but precise liability depends on filing status, deductions, credits, and whether thresholds are indexed or changed by statute [1] [5]. The California Franchise Tax Board is the official source for current tables, calculators and legislative updates; tax preparers and the FTB site should be consulted for exact thresholds and year‑specific figures [15] [5].
Limitations: available sources in this packet summarize the rates, surtax, bracket counts and ongoing legislative activity, but do not all publish an identical numeric table in these snippets; for final withholding or planning decisions, consult the Franchise Tax Board tables or a tax professional as suggested by several guides [15] [5].