California

The facts on California’s Tax Climate

California's Top Individual Income Tax Rate Is Second Highest in the Nation
With seven brackets and a top rate of 10.3 percent for those earning over $1,000,000, California's individual income tax has the second highest rate and one of the most highly progressive structures in the nation. In 2010, California's state-level individual income tax collections were $1,229 per person, which ranked 5th highest nationally. Since most small businesses are S Corporations, partnerships, or sole proprietorships, they pay their business taxes at the rates for individuals. That makes California's taxes on small businesses some of the most burdensome in the nation. 
50-State Table of Individual Income Tax Rates

50-State Table of State Individual Income Tax Collections

50-State Table of State and Local Individual Income Tax Collections Per Capita

California's Corporate Income Tax Rate is the Highest in the West 
Corporations looking to relocate, or even establish, a business in the West may shy away from California, as the state's 8.84% flat rate is the highest corporate tax rate in the West. Nationally, only 8 states have a higher top corporate tax rate than California. In 2010, state-level corporate tax collections (excluding local taxes) in California were $245 per capita, which ranked 4th highest nationally. 
50-State Table of Corporate Income Tax Rates

50-State Table of State and Local Corporate Income Tax Collections Per Capita

50-State Table of State Corporate Income Tax Collections Per Capita

California's Sales Tax Rate Is Highest in the Nation
California levies a 7.25% general sales or use tax on consumers, which is the highest in the nation and well above than the national median of 6%. The average local sales tax rate in California is 0.86%. In 2009, California collected $1,015 per capita in general sales taxes, and $323 per capita in excise taxes, for a combined figure of $1,338, which ranks 25th highest nationally. California's statewide gasoline tax stands at 48.6 cents per gallon and is the second highest in the nation, while its cigarette tax stands at $0.87 per pack of twenty (32nd highest nationally).
50-State Table of State and Local General Sales Tax Collections Per Capita

Property Tax Collections Slightly Above Average 
Despite Proposition 13, California ranks in the middle of the pack when the states are ranked on combined state/local property tax collections. Proposition 13 favors people who have owned the same property many years by only permitting re-evaluations at resale.  California collected $1,465 per capita in state and local property taxes in fiscal year 2009, which ranks 15th highest among all states.
State and local property tax collections per capita by state

Tax Freedom Day Arrives on April 20 in California

Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2012, California taxpayers work until April 20 (ranked 11th nationally) to pay their total tax bill. The Tax Freedom Days of neighboring states are: Oregon, April 15 (ranked 21st nationally); Nevada, April 18 (ranked 14th nationally); and Arizona, April 10 (ranked 35th nationally).

Full study of Tax Freedom Day, nationwide and in each state

California's State and Local Tax Burden Above National Average

California's 2009 state and local tax burden of 11.8% of income is above the national average of 9.8%. California's tax burden has decreased overall from 11.8% (5th nationally) in 1977 to 10.6% (6th nationally) in 2009. Californians pay $4,910 per capita in state and local taxes.
California's State and Local Tax Burden, 1977-present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009

California's 2012 Business Tax Climate Ranks 48th

California ranks 48th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Washington (7th), Oregon (13th), Arizona (27th), Nevada (3rd) and Hawaii (35th). 
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study) .

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