California has a graduated state individual income tax, with rates ranging from 1.00 percent to 13.30 percent. An additional payroll tax on wage income brings the top rate to 14.6 percent on wage income—the highest combined income tax rate in the United States. California has an 8.84 percent corporate income tax rate, a 7.25 percent state sales tax rate, and an average combined state and local sales tax rate of 8.99 percent. California has a 0.70 percent effective property tax rate on owner-occupied housing value. California does not have an estate tax or inheritance tax. California’s gas tax is 70.92 cents per gallon, and its cigarette excise tax is $2.87 per pack of 20 cigarettes.
California raises tax revenue primarily through individual income taxes (27.5 percent of total state and local tax revenue), property taxes (26.3 percent), and general sales taxes (21.5 percent). California collects $8,942 in state and local tax collections per capita, carries $14,812 in state and local debt per capita, and has an 84 percent funded ratio of public pension plans. California’s tax system ranks 48th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and California is no exception. Use the tabs below to compare California taxes with other states and to see how California raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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In the United States, taxes are the single most expensive ingredient in beer. The tax burden accounts for more of the final price of beer than labor and materials combined—the many different layers of applicable taxes combining to total as much as 40.8 percent of the retail price.
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Policies that increase the tax burden on high earners makes states less competitive, increase revenue volatility, discourage investment, and risk accelerating outmigration of talent and capital. Many top-earners are already leaving high-tax states for Florida, North Carolina, and other low-tax jurisdictions.
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Voters in California this fall will have to determine whether the state will institute a billionaire tax. Advocates of this proposal have been pushing for these kinds of money grabs for decades—and their arguments often run the same. The base is narrow, the lifespan is limited, the cause is sympathetic.
If approved by voters, the wealth tax will face a flurry of serious legal challenges—some to its overall constitutionality, and some regarding who can be taxed and to what degree if the tax survives broader legal scrutiny.
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The significant disparity in tax rates across states underscores the complex tax and regulatory environment governing distilled spirits.
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Tax collections vary widely by state, making per capita collections figures—a measure of collections per person—especially useful, as they allow comparisons across differences in tax rates and bases, economic capacities, and policy decisions that impact the size and scope of government.
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Rental cars are some of the most heavily taxed transactions in the US. Rather than levying additional taxes on rental cars by trying to export the tax burden to nonresidents, municipalities should enact principled, neutral transportation tax policy that is unlikely to discourage visitors, tourists, and other economic activity.
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From coast to coast, lawmakers are embracing wealth and millionaires’ taxes. Many of these proposals will face their ultimate test at the ballot box this November, and we should be rooting for these measures to fail.
California lawmakers are considering mandating worldwide combined reporting, bringing back a policy the state abandoned in the 1980s due to strong pushback from international trading partners and the federal government. The policy failed to work as intended then and doesn’t make any better sense now.
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Millions of Americans, along with significant amounts of income and economic activity, are moving from high-tax states to those with more competitive tax systems and lower overall costs of living.
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