What are California's income tax brackets for 2026?
California runs a progressive income tax with 9 brackets: 1%, 2%, 4%, 6%, 8%, 9.3%, 10.3%, 11.3%, and 12.3%. Taxable income above $1,000,000 also gets hit with an extra 1% surcharge, the Behavioral Health Services Tax (formerly the Mental Health Services Tax), which pushes the effective top rate to 13.3%.
A quick note on the year: the Franchise Tax Board (FTB) publishes each year's inflation-adjusted brackets in the fall. As of this writing, the most recent official figures are the 2025 tax year brackets, the ones you'll use on the return you file in 2026. The 2026 tax year brackets (filed in 2027) won't be final until the FTB releases them later this year. Everything below uses the confirmed 2025 figures, and we'll note when a number could shift with the next inflation adjustment.
Key Highlights
- 9 regular brackets from 1% to 12.3%, plus a 1% surcharge over $1,000,000 taxable income.
- Top combined marginal rate: 13.3%, the highest of any state.
- 2025 standard deduction: $5,706 (single/married filing separately) or $11,412 (married filing jointly, head of household, qualifying surviving spouse).
- California doesn't offer a lower rate for capital gains. Gains are taxed as ordinary income.
- State Disability Insurance (SDI) is 1.3% in 2026, with no wage cap.
- The $1 million surcharge threshold has never been adjusted for inflation since it took effect in 2005.
Full 2025 California tax brackets by filing status
These are the official FTB rate schedules for the 2025 tax year (the return you file in 2026). Use them if your taxable income is over $100,000; below that, the FTB's tax tables apply slightly different rounding.
Single or married/RDP filing separately (Schedule X)
| Rate | Taxable income | Tax owed |
|---|---|---|
| 1% | $0 – $11,079 | 1% of the amount |
| 2% | $11,080 – $26,264 | $110.79 + 2% over $11,079 |
| 4% | $26,265 – $41,452 | $414.49 + 4% over $26,264 |
| 6% | $41,453 – $57,542 | $1,022.01 + 6% over $41,452 |
| 8% | $57,543 – $72,724 | $1,987.41 + 8% over $57,542 |
| 9.3% | $72,725 – $371,479 | $3,201.97 + 9.3% over $72,724 |
| 10.3% | $371,480 – $445,771 | $30,986.19 + 10.3% over $371,479 |
| 11.3% | $445,772 – $742,953 | $38,638.27 + 11.3% over $445,771 |
| 12.3% | $742,954+ | $72,219.84 + 12.3% over $742,953 |
Married/RDP filing jointly or qualifying surviving spouse (Schedule Y)
| Rate | Taxable income |
|---|---|
| 1% | $0 – $22,158 |
| 2% | $22,159 – $52,528 |
| 4% | $52,529 – $82,904 |
| 6% | $82,905 – $115,084 |
| 8% | $115,085 – $145,448 |
| 9.3% | $145,449 – $742,958 |
| 10.3% | $742,959 – $891,542 |
| 11.3% | $891,543 – $1,485,906 |
| 12.3% | $1,485,907+ |
Head of household (Schedule Z)
| Rate | Taxable income |
|---|---|
| 1% | $0 – $22,173 |
| 2% | $22,174 – $52,530 |
| 4% | $52,531 – $67,716 |
| 6% | $67,717 – $83,805 |
| 8% | $83,806 – $98,990 |
| 9.3% | $98,991 – $505,208 |
| 10.3% | $505,209 – $606,251 |
| 11.3% | $606,252 – $1,010,417 |
| 12.3% | $1,010,418+ |
Source: California Franchise Tax Board, 2025 Form 540 Tax Rate Schedules: June 2026. Rates for the 2026 tax year will be indexed for inflation and published by the FTB later this year; verify current figures at ftb.ca.gov before filing.
Crossing into the 9.3% bracket doesn't mean 9.3% applies to every dollar you earn. Only the income inside that bracket gets the higher rate; everything below it still gets taxed at the lower rates that came before. That's why your effective rate (what you actually pay divided by total income) always lands well under your marginal rate.
How to calculate your California income tax
Example: $2,000,000 taxable income, single filer. Regular tax = $72,219.84 + 12.3% × ($2,000,000 − $742,953) = $226,847.63. Surcharge = 1% × ($2,000,000 − $1,000,000) = $10,000. Total = $236,847.63.
How California taxable income is built
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Real-world examples with the math worked out
Scenario 1: Single filer earning $85,000
Situation
A single filer earns $85,000 and takes the standard deduction of $5,706, leaving taxable income of $79,294.
That falls in the 9.3% bracket: $3,201.97 + 9.3% × ($79,294 − $72,724) = $3,201.97 + $611.01 = $3,812.98 owed.
Key lesson: The effective rate here is about 4.8% of taxable income, far below the 9.3% marginal rate that applies only to the last few thousand dollars earned.
Scenario 2: Married couple filing jointly earning $180,000 combined
Situation
A married couple earns $180,000 combined and claims the $11,412 joint standard deduction, for taxable income of $168,588.
Their bracket math: $6,403.94 (the tax on the first $145,449) + 9.3% × ($168,588 − $145,449) = $6,403.94 + $2,151.93 = $8,555.87 owed.
Key lesson: Filing jointly roughly doubles most bracket widths compared to single filers, which is why two similar single incomes combined don't automatically push a couple into a much higher bracket.
Scenario 3: High earner with $1.2 million in taxable income
Situation
A single filer has $1,200,000 in taxable income after deductions, from a mix of salary and a business sale.
Regular tax: $72,219.84 + 12.3% × ($1,200,000 − $742,953) = $72,219.84 + $56,216.78 = $128,436.62. Surcharge: 1% × ($1,200,000 − $1,000,000) = $2,000. Total: $130,436.62.
Key lesson: The surcharge only bites the slice above $1 million, so it adds a modest amount here, not a blanket extra 1% on the whole $1.2 million.
Scenario 4: RSU vesting pushes income to $450,000
Situation
A single tech employee earns a $150,000 base salary plus $300,000 in RSUs that vest in one year, for taxable income of $444,294 after the standard deduction.
That lands in the 10.3% bracket: $30,986.19 + 10.3% × ($444,294 − $371,479) = $30,986.19 + $7,499.95 = $38,486.14 owed.
Key lesson: A single large RSU vesting event can jump a filer two or three brackets in one year, even if their base salary alone would sit much lower.
Where California doesn't match federal rules
California's tax code doesn't automatically follow every change to federal law. A few gaps matter most for individual filers.
| Item | Federal treatment | California treatment |
|---|---|---|
| Standard deduction (single) | $15,750 | $5,706 |
| Standard deduction (married filing jointly) | $31,500 | $11,412 |
| Capital gains | Preferential long-term rates | Taxed as ordinary income, no discount |
| HSA contributions | Deductible | Not deductible; HSA earnings are taxable too |
| Municipal bond interest (out-of-state) | Tax-exempt | Taxable, unless the bond is from a California issuer |
| Extra deduction for filers 65+ | Additional standard deduction applies | No age-based add-on; California uses a senior exemption credit instead |
Source: California FTB, Schedule CA (540) instructions and Publication 1001, 2025 tax year. Confirm current figures before filing since both federal and state numbers adjust yearly.
How California compares to other states
| State | Top marginal rate | Notes |
|---|---|---|
| California | 13.3% | 12.3% top bracket + 1% surcharge over $1M |
| New York | 10.9% | Plus NYC residents pay up to 3.876% city tax |
| Hawaii | 11% | Top rate applies above $200,000 (single) |
| Oregon | 9.9% | No sales tax offsets a lower top rate |
| Texas / Florida / Nevada / Washington | 0% | No state income tax; revenue comes from sales, property, or other taxes |
California's 13.3% is the highest state income tax rate in the country, and it applies to a broader stack of ordinary income and capital gains than most peer states.
Who benefits and who's most affected
Who benefits
- Lower and middle earners: The bottom 4 brackets (1% to 8%) cover a wide income range, keeping the effective rate low for most filers under $75,000.
- Public services funded by the surcharge: The 1% surcharge funds county behavioral health programs, supporting roughly a third of that system statewide.
Who's affected most
- High earners with lumpy income: Stock sales, RSU vesting, or a business sale can trigger the 13.3% top rate even in a single unusual year.
- Investors: Without a capital gains discount, California taxes long-term investment gains the same as wages.
- Remote workers who moved out of state: California can still tax California-source income for part-year residents and nonresidents in some cases.
Expert Tip — Ritu Sharma
"Time large income events around the calendar year, not the calendar -If you control the timing of a bonus, RSU sale, or Roth conversion, splitting it across two tax years instead of realizing it all at once can keep more of it out of the 11.3%, 12.3%, and 1% surcharge tiers. This only works with income you actually control the timing of, and it doesn't apply to W-2 wages or vesting schedules set by an employer."
Common questions about who owes what
- Do I owe California tax if I live in another state?: Yes, if you have California-source income, like wages from California work or income from a California business or rental property, even as a full nonresident.
- Does the $1 million surcharge threshold double for married couples?: No. Married couples filing jointly share a single $1,000,000 threshold on their combined income, not $1 million each.
- Are capital gains taxed at a lower rate in California?: No. California has no separate capital gains rate; gains are added to ordinary income and taxed at the regular bracket rates.
- What income counts toward the $100,000 threshold for using the rate schedules instead of the tax table?: Your California taxable income on Form 540, line 19, after deductions, not your gross income.
- Do retirees pay these same brackets on pension and Social SecurityIs Social Security Taxable in 2026? Thresholds + Senior Deduction income?: Social Security is exempt from California tax, but pensions and 401(k)/IRA withdrawals are taxed as ordinary income under the same brackets.
- Is there a separate California tax bracket for short-term versus long-term investments?: No. Both are taxed identically as ordinary income; the federal short-term/long-term distinction doesn't carry over.
Filers who expect to cross $1,000,000 in taxable income should send quarterly estimated payments covering the extra 1%, not just the regular tax. Underpaying by a wide margin triggers a penalty even if the full balance gets paid by the April deadline.
Compliance risks and limitations to watch
A few areas trip up filers more than the brackets themselves.
Underpayment penalties. California charges a penalty if withholding and estimated payments fall short of what you owe during the year, calculated separately from any federal underpayment penalty.
Residency audits. The FTB actively audits high earners who claim they moved out of state, especially when they kept a home, family, or business ties in California. A successful audit can mean owing California tax on income you assumed was out of reach.
Nonconformity traps. HSA contributions, certain retirement account rules, and some business deductions differ from federal treatment. Filers who copy their federal numbers straight onto Schedule CA without adjusting often misstate their California taxable income.
Why California's tax structure looks this way
California leans harder on income tax than most states partly because Proposition 13 capped property tax growth back in 1978, pushing the state to rely more on income and sales tax for revenue. The top 1% of earners contribute a large share of state income tax collections, which makes California's budget unusually sensitive to swings in stock prices and capital gains. The 1% surcharge itself dates to Proposition 63 in 2004, when voters chose to fund mental health and, since 2024's Proposition 1, behavioral health and substance use treatment through a dedicated tax on income over $1 million rather than through the general fund.
Final verdict: what these brackets mean for you
California's 2026 filing season runs on 9 brackets from 1% to 12.3%, plus the 1% surcharge over $1 million that creates the well-known 13.3% top rate. Most filers under $75,000 in taxable income never see a marginal rate above 8%, and the progressive structure means your effective rateHow Federal Tax Brackets Work: Marginal vs Effective Rate Explained (2025) stays well under your top bracket at every income level. High earners with concentrated income events, RSU vesting, business sales, large bonuses, face the sharpest jumps and benefit most from planning the timing of that income. Pull your actual taxable income from last year's return and run it through the Schedule X, Y, or Z table above to see exactly where you land, then check ftb.ca.gov in the fall for the finalized 2026 tax year figures before you file.
