What California takes from your paycheck

California withholds three separate payroll taxes from your wages: state income tax, Social Security tax (6.2%), and Medicare tax (1.45%). The state income tax rate depends on how much you earn — it ranges from 1% on the lowest wages to 13.3% on the highest, making California one of the highest state income tax states in the country. Your employer calculates what to withhold based on the W-4 form you filled out when you were hired.

Social Security and Medicare are federal taxes, not state taxes, so they are the same in California as everywhere else. State income tax is what varies. The 13.3% top rate applies only to income over $680,000 (for the 2024 tax year), so most workers pay far less. A worker earning $50,000 a year in California typically pays around 5.2% in state income tax, plus the 7.65% in federal payroll taxes (Social Security and Medicare combined).

Key Takeaways

  • California state income tax ranges from 1% to 13.3% depending on your income level, and is withheld from every paycheck.
  • Social Security tax (6.2%) and Medicare tax (1.45%) are federal taxes withheld the same way in California as in all other states.
  • Your employer uses your W-4 form to decide how much to withhold, and you can change your W-4 if you want more or less withheld.
  • The actual tax you owe at the end of the year may differ from what was withheld, which is why you file a tax return.

How California's tax brackets work

California uses a progressive tax system, meaning the rate increases as your income goes up. You do not pay the top rate on all your income — you pay the lower rate on the first portion, then the next rate on the next portion, and so on. For example, in 2024, the first $10,099 of income is taxed at 1%, the next portion up to $23,942 is taxed at 2%, and so on up the brackets.

The brackets change slightly each year because California adjusts them for inflation. If you earn $60,000 in California, you would not pay 9.3% on all of it. Instead, you would pay 1% on the first $10,099, then 2% on the next portion, then 4% on the next, and so on, with your total state tax coming to roughly $3,100 to $3,200 depending on the exact breakdown of your income.

What your W-4 controls

The W-4 form you complete when you start a job tells your employer how much to withhold from each paycheck. It asks about your filing status, whether you have dependents, and whether you have other income. Based on your answers, your employer calculates a withholding amount that is supposed to match what you will owe at tax time.

If you find that you are getting a large refund every year, you can adjust your W-4 to have less withheld, which means a bigger paycheck. If you owe money when you file your return, you can adjust your W-4 to have more withheld. You can change your W-4 at any time by talking to your payroll or human resources department — you do not have to wait until the new year.

Self-employment tax in California

If you are self-employed or run your own business in California, you pay both the employee and employer portions of Social Security and Medicare tax, which adds up to 15.3% (12.4% for Social Security, 2.9% for Medicare). You also owe California state income tax on your net business income. Self-employed workers typically pay these taxes quarterly using estimated tax payments rather than having them withheld from a paycheck.

California does not have a separate self-employment tax on top of the federal one, but you do owe state income tax on your business earnings. Many self-employed workers set aside 25% to 30% of their income to cover both federal and state taxes, then adjust based on what they actually owe when they file their return.

How to check your withholding

The easiest way to see what California is withholding from your paycheck is to look at your pay stub. It should show your gross pay, the amount withheld for state income tax, the amount withheld for Social Security, the amount withheld for Medicare, and any other deductions. Add up the state income tax withheld over the year — if it is much less than what you expect to owe, you may want to adjust your W-4.

You can also use the California Franchise Tax Board's withholding calculator on their website to estimate whether your withholding is on track. This tool asks about your income, filing status, and dependents, then tells you whether you are likely to owe money or get a refund. If the estimate shows a problem, you can adjust your W-4 before the end of the year.

Special California taxes on high earners

California has an additional 1% tax on income over $1 million, which was originally meant to be temporary but has been extended. This brings the top marginal rate to 13.3% for income above $680,000, and 14.3% for income above $1 million. These rates explore only to the income in those brackets, not to your entire income.

There is also a net investment income tax of 3.8% on certain investment income for high earners, though this is a federal tax, not a California tax. If you earn significant income from investments, your payroll withholding may not cover all the tax you owe, and you may need to make estimated tax payments.

What happens if too much or too little is withheld

If your employer withholds more than you actually owe, you get a refund when you file your California tax return. If your employer withholds less than you owe, you have to pay the difference. The amount withheld is just an estimate based on your W-4 — it is not the final amount you owe.

Some life changes mean you should update your W-4 right away: getting married or divorced, having a child, taking a second job, or a significant change in income. The sooner you adjust your withholding, the sooner your paychecks will reflect the correct amount, and the less likely you are to be surprised at tax time.

Frequently Asked Questions

Why is California's tax rate so much higher than other states?

California has a progressive income tax system with rates that go up to 13.3%, which is among the highest in the country. The state uses income tax revenue to fund schools, healthcare, infrastructure, and other services. Some states have no income tax at all, but they typically make up the difference with higher sales taxes or property taxes.

Do I pay California state income tax if I work remotely for a company in another state?

If you live in California and work remotely, you owe California state income tax on your wages, even if your employer is based elsewhere. California taxes income earned by residents, regardless of where the employer is located. Your employer should be withholding California state income tax from your paycheck.

What if my paycheck shows no state income tax withheld?

This usually means you claimed an exemption on your W-4, or your income is low enough that no tax is owed. Check your W-4 to see what you claimed. If you think an error was made, contact your payroll department. You may owe state income tax when you file your return even if nothing was withheld.

Can I reduce my California state income tax withholding?

You can adjust your W-4 to change how much is withheld, but you cannot avoid owing the tax itself. If you reduce your withholding and do not owe enough tax during the year, you will owe the difference when you file your return. Adjusting withholding is useful if you are getting a large refund and want a bigger paycheck, but it does not reduce your total tax bill.

Is there a penalty if I do not have enough withheld?

If you significantly underpay your taxes throughout the year, California may charge a penalty when you file your return. The penalty is usually small if you owe only a modest amount, but it can add up if you owe a large sum. Adjusting your W-4 or making estimated tax payments can help you avoid this penalty.