Guides
California State Income Tax: 2026 Rates and Brackets
California state income tax runs from 1% to 13.3% across nine progressive brackets, the highest top rate of any U.S. state. The 13.3% figure combines a 12.3% top bracket with a 1% Mental Health Services Tax (now the Behavioral Health Services Tax) on taxable income above $1,000,000. Residents are taxed on worldwide income; nonresidents pay only on California-source income. The Franchise Tax Board (FTB) administers the tax, and most individuals file on Form 540.
This guide covers the current brackets, the millionaire surcharge, the separate State Disability Insurance (SDI) payroll tax, and how residency changes what California can tax.
What are the 2026 California income tax brackets?
California uses nine tax brackets with rates from 1% to 12.3%, plus a 1% surcharge above $1 million that lifts the effective top rate to 13.3%. Only the income that falls inside each bracket is taxed at that bracket’s rate, so a higher bracket never applies to your whole income. Thresholds are indexed to the California Consumer Price Index and shift upward most years.
The table below shows the tax-year 2025 rate schedule, the figures used on returns filed in 2026. Tax-year 2026 thresholds are adjusted upward for inflation but the rates themselves do not change.
| Rate | Single / Married Filing Separately | Married Filing Jointly / Qualifying Surviving Spouse |
|---|---|---|
| 1% | $0 to $10,756 | $0 to $21,512 |
| 2% | $10,756 to $25,499 | $21,512 to $50,998 |
| 4% | $25,499 to $40,245 | $50,998 to $80,490 |
| 6% | $40,245 to $55,866 | $80,490 to $111,732 |
| 8% | $55,866 to $70,606 | $111,732 to $141,212 |
| 9.3% | $70,606 to $360,659 | $141,212 to $721,318 |
| 10.3% | $360,659 to $432,787 | $721,318 to $865,574 |
| 11.3% | $432,787 to $721,314 | $865,574 to $1,442,628 |
| 12.3% | $721,314 to $1,000,000 | $1,442,628 to $2,000,000 |
| 13.3% (incl. 1% surcharge) | Over $1,000,000 | Over $1,000,000 |
Head of household filers use a separate schedule with wider brackets than single filers. Verify current-year thresholds against the FTB tax rate schedules before filing, because the indexed figures can change each year.
The 1% Mental Health Services Tax over $1 million
California adds a 1% tax on every dollar of taxable income above $1,000,000, on top of the regular schedule. Voters created it as the Mental Health Services Tax under Proposition 63 in 2004; Proposition 1 (2024) renamed the program the Behavioral Health Services Act and broadened its scope to substance use disorder care. The surcharge is reported on the same Form 540 or 540NR as the base tax.
The $1,000,000 threshold is the same for every filing status. Married couples filing jointly do not get a doubled threshold for this surcharge, so a joint return crosses into the 1% tax at the same $1 million mark as a single filer. That is why the top marginal rate reaches 13.3% for all filers at $1 million, even though the base 12.3% bracket for joint filers does not start until much higher income.
The $1 million threshold has not been indexed for inflation since 2004. Over time, more taxpayers may cross it as incomes rise, a form of bracket creep. The surcharge has no scheduled sunset under current law.
California State Disability Insurance (SDI) wage tax
SDI is a separate payroll tax withheld from wages, not part of the income tax brackets. The 2026 employee SDI withholding rate is 1.3% of wages, funding State Disability Insurance and Paid Family Leave benefits administered by the Employment Development Department (EDD). Employers withhold it automatically and report it in Box 14 of your Form W-2.
Since January 1, 2024, SDI applies to all wages with no cap. Before Senate Bill 951 removed the ceiling, only wages up to an annual limit were taxed. Now a worker earning $500,000 pays 1.3% on the full amount, roughly $6,500, where the old cap would have stopped withholding far earlier. The change shifted more of the cost onto higher earners.
SDI withholding can be partly recoverable in narrow cases. If you work for two or more employers and your combined wages push total SDI withholding above the maximum for the year, you may claim the excess as a credit on your California return. Withholding from a single employer is generally not refundable.
California residency and what gets taxed
California taxes residents on all income worldwide and taxes nonresidents only on income sourced to California, such as wages for work performed in the state or California rental income. Part-year residents are taxed on everything earned while a resident plus California-source income for the rest of the year. Residents file Form 540; nonresidents and part-year residents file Form 540NR.
Residency turns on domicile and your closest connections, not just where you sleep. The FTB weighs factors including where your home, family, vehicles, and voter and professional registrations are located. Someone who spends significant time in another state can still be a California resident if their strongest ties remain in California, so leaving for tax purposes often requires cutting genuine connections.
A safe harbor may apply to residents on long employment assignments abroad. Under the FTB rule, a California domiciliary who is outside the state for at least 546 consecutive days under an employment contract can often be treated as a nonresident for that period, subject to limits on California-source income and time spent back in the state. The rules are fact-specific, so confirming your status with a tax professional before relying on the safe harbor is prudent.
For a comparison with another high-rate state, see our guide to New York State income tax. Business owners weighing entity taxes can review the California LLC fee and franchise tax, and high earners exploring the SALT cap workaround can read about the pass-through entity tax (PTET) election.
How to estimate your California tax
Calculate California tax in three steps: find California taxable income, apply the bracket schedule, then add the 1% surcharge if income tops $1 million. California starts from federal adjusted gross income and makes state-specific adjustments, so your California taxable income often differs from your federal figure.
- Start with federal AGI, then apply California additions and subtractions on Schedule CA (540) for items California treats differently.
- Subtract the California standard deduction ($5,706 single or married filing separately; $11,412 married filing jointly, head of household, or qualifying surviving spouse for 2025) or itemized deductions, whichever is larger.
- Apply the bracket schedule to that taxable income, add the 1% surcharge on any amount over $1,000,000, then subtract credits such as the California Earned Income Tax Credit.
Your effective rate, total tax divided by total income, is well below the top bracket for most filers because the low brackets apply first. To understand the difference, see marginal versus effective tax rate. California’s combined burden ranks among the highest nationally, as detailed in our state and local tax burden report.
Frequently asked questions
What is the top California income tax rate in 2026?
The top California income tax rate is 13.3%, which applies to taxable income above $1,000,000. It combines the 12.3% top bracket with a 1% Behavioral Health Services Tax surcharge. This remains the highest state income tax rate in the United States. The rate has held steady while the underlying bracket thresholds adjust for inflation each year.
Does California tax income earned in another state?
California taxes its residents on all income regardless of where it is earned, including wages, business income, and investment income from outside the state. Nonresidents are taxed only on California-source income. A credit for taxes paid to other states may reduce double taxation on the same income, depending on the states involved and your residency status.
Is the California SDI tax the same as income tax?
No. SDI is a separate 1.3% payroll tax (2026 rate) withheld from wages to fund State Disability Insurance and Paid Family Leave, administered by the EDD. It is not part of the income tax brackets and does not appear on the Form 540 rate schedule. Since 2024, SDI applies to all wages with no cap, so higher earners pay more than under the old ceiling.
Do married couples get a higher threshold for the 1% surcharge?
No. The 1% surcharge threshold is $1,000,000 for every filing status, including married filing jointly. Unlike the regular brackets, which are roughly doubled for joint filers, the surcharge threshold is not doubled. A married couple filing jointly begins paying the extra 1% on taxable income above $1 million, the same point as a single filer.
What is California taxable income based on?
California taxable income generally starts from your federal adjusted gross income, then applies state-specific additions and subtractions on Schedule CA (540) and the California standard or itemized deduction. California does not conform to every federal rule, so items such as certain retirement contributions, HSA amounts, and depreciation can differ, changing the state figure relative to the federal one.
Can I avoid California income tax by moving out of state?
Moving can end California residency, but the FTB looks at domicile and your closest connections, not just a new mailing address. Keeping a home, family, business ties, or registrations in California can preserve residency and the tax on worldwide income. Establishing residency elsewhere usually requires genuinely relocating your life, and California-source income remains taxable to nonresidents.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.