California State Income Tax for 2011, 2012

The California State Income Tax has a 9.3% maximum variable rate with six tax brackets and rakes in around 40 billion a year (40% of overall state revenue and 51% of general revenue). The state sales tax in California is 8.25%, and with local sales tax added it can total up to 10.75%.

There is an annual property tax which is based on the fair market value that the property had at the time of purchase, or the time new construction was completed. The cap for property taxes is 2% per year.

California Tax Credits

Environmental Tax Credit - This credit is for small oil refineries and offers five cents for every gallon of ultra low sulfur diesel fuel that is produced there.

Employer Child Car Program - If you’re an employer and you establish and construct a child care facility on your premises, you can claim a credit for 30% of the however much that cost you.

Child Adoption Credit - If you choose to adopt a child, you can claim a credit for 50% of the qualified costs in the year the adoption was ordered.

Financial Issues

California is facing some major financial problems these days and part of those problems stem from taxation. A large part of the state’s income comes from the income taxes of a small proportion of wealthy citizens. In 2004, it’s estimated that the richest 3% of taxpayers in California (those with over $200,000 for their yearly income) paid over 60% of California State Income Taxes.

The amount of income that’s taxable in California is very dependent on capital gains, and with the recent stock market crash there has been a highly visible decline in the California economy. There have been extensive plans for tax increases and program cuts put forth by the governor, but due to outstanding problems in the California legislative branch it’s unlikely that any of it will pass into law.