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Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.

California has the highest top marginal income tax rate in the country. It’s a high-tax state in general, which affects the paychecks Californians earn. The Golden State’s income tax system is progressive, which means wealthy filers pay a higher marginal tax rate on their income. Cities in California levy their own sales taxes, but do not charge their own local income taxes.

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California Paycheck Calculator

Photo credit: ©iStock.com/AleksanderNakic California Paycheck Quick Facts California income tax rate: 1.00% - 13.30%

Median household income in California: $71,228 (U.S. Census Bureau)

Number of cities that have local income taxes: 0

How Your California Paycheck Works

Your job probably pays you either an hourly wage or an annual salary. But unless you’re getting paid under the table, your actual take-home pay will be lower than the hourly or annual wage listed on your job contract. The reason for this discrepancy between your salary and your take-home pay has to do with the tax withholdings from your wages that happen before your employer pays you. There may also be contributions toward insurance coverage, retirement funds, and other optional contributions, all of which can lower your final paycheck.

When calculating your take-home pay, the first thing to come out of your earnings are FICA taxes for Social Security and Medicare. Your employer withholds a 6.2% Social Security tax and a 1.45% Medicare tax from your earnings after each pay period. If you earn over $200,000, you’ll also pay a 0.9% Medicare surtax. Your employer matches the 6.2% Social Security tax and the 1.45% Medicare tax in order to make up the full FICA taxes requirements. If you work for yourself, you’ll have to pay the self-employment tax, which is equal to the employee and employer portions of FICA taxes for a total of 15.3% of your pay. (Luckily, there is a deduction for the part of FICA taxes that your employer would normally pay.)

Other factors that can affect the size of your paycheck in California or in any other state include your marital status, your pay frequency and what deductions and contributions you make. If you make contributions to your company’s health insurance plan, for example, that payment will be deducted from each of your paychecks before the money hits your bank account. The same goes for contributions you make to a 401(k) or a Health Savings Account (HSA).

In December 2017, President Trump signed a new tax plan into law. The IRS has since released updated tax withholding guidelines, and taxpayers should have seen changes to their paychecks starting in February 2018. There aren't many new changes for 2019, and for the time being taxpayers do not need to fill out a new W-4, as employers will use the withholdings on your current form.

However, the IRS has made revisions to the Form W-4 for 2020. The new version removes the use of allowances, along with the option of claiming personal or dependency exemptions. Instead, it requires that the filer enter specific dollar amounts, and it uses a five-step process that lets you enter personal information, claim dependents and indicate any additional income. These changes mainly apply to anyone adjusting their withholdings and those who got a new job following Jan. 1, 2020. For reference, employees hired before 2020 aren’t required to complete a new W-4. Finally, the tax return you file in April 2021 will contain any adjustments you’ve made to your withholdings in 2020.

California Median Household Income Year Median Household Income 2018 $71,228 2017 $67,169 2016 $63,783 2015 $61,818 2014 $61,933 2013 $60,190 2012 $58,328 2011 $57,287 2010 $57,708 2009 $58,931 2008 $61,021 2007 $59,948 2006 $56,645

So what makes California’s payroll system different from the systems you might have encountered in other states? For one thing, taxes here are considerably higher. The state has nine income tax brackets and the system is progressive. So if your income is on the low side, you'll pay a lower tax rate than you likely would in a flat tax state.

California’s notoriously high top marginal tax rate of 12.3%, which is the highest in the country, only applies to income above $590,742 for single filers and $1,181,484 for joint filers. But should you surpass $1 million in taxable income, California will charge you a 1% surtax, making the final rate for these taxpayers 13.3%.

While the income taxes in California are high, the property tax rates are fortunately below the national average. If you are thinking about using a mortgage to buy a home in California, check out our guide to California mortgage rates.

California also does not have any cities that charge their own income taxes. However, sales tax in California does vary by city and county. This won’t affect your paycheck, but it might affect your overall budget.

California is one of the few states to require deductions for disability insurance. This may seem like a drag, but having disability insurance is a good idea to protect yourself and your family from any loss of earnings you might suffer in the event of a short- or long-term disability.

If you earn money in California, your employer will withhold state disability insurance payments equal to 1% of your taxable wages, up to $122,909 per calendar year. The maximum your employer can withhold for State Disability Insurance (SDI) is $1,229.09. SDI also provides California’s Paid Family Leave program.

Some employees earn supplemental wages. This includes overtime, commission, awards, bonuses, payments for non-deductible moving expenses (often called a relocation bonus), severance and pay for accumulated sick leave. In California, these supplemental wages are taxed at a flat rate. Bonuses and earnings from stock options are taxed at a flat rate of 10.23%, while all other supplemental wages are taxed at a flat rate of 6.6%. These taxes will be reflected in the withholding from your paycheck if applicable.

Income Tax Brackets Single Filers

Married, Filing Jointly

Married, Filing Separately

Head of Household Single Filers California Taxable Income Rate $0 - $8,809 1.00% $8,809 - $20,883 2.00% $20,883 - $32,960 4.00% $32,960 - $45,753 6.00% $45,753 - $57,824 8.00% $57,824 - $295,373 9.30% $295,373 - $354,445 10.30% $354,445 - $590,742 11.30% $590,742 - $1,000,000 12.30% $1,000,000+ 13.30% Married, Filing Jointly California Taxable Income Rate $0 - $17,618 1.00% $17,618 - $41,766 2.00% $41,766 - $65,920 4.00% $65,920 - $91,506 6.00% $91,506 - $115,648 8.00% $115,648 - $590,746 9.30% $590,746 - $708,890 10.30% $708,890 - $1,181,484 11.30% $1,181,484 - $2,000,000 12.30% $2,000,000+ 13.30% Married, Filing Separately California Taxable Income Rate $0 - $8,809 1.00% $8,809 - $20,883 2.00% $20,883 - $32,960 4.00% $32,960 - $45,753 6.00% $45,753 - $57,824 8.00% $57,824 - $295,373 9.30% $295,373 - $354,445 10.30% $354,445 - $590,742 11.30% $590,742 - $1,000,000 12.30% $1,000,000+ 13.30% Head of Household California Taxable Income Rate $0 - $17,629 1.00% $17,629 - $41,768 2.00% $41,768 - $53,843 4.00% $53,843 - $66,636 6.00% $66,636 - $78,710 8.00% $78,710 - $401,705 9.30% $401,705 - $482,047 10.30% $482,047 - $803,410 11.30% $803,410 - $1,000,000 12.30% $1,000,000+ 13.30%

The city of San Francisco levies a 1.50% gross receipts tax on the payroll expenses of large businesses. Although this is sometimes conflated as a personal income tax rate, the city only levies this tax on businesses. Therefore, you will not be responsible for paying it.

A financial advisor in California can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.

How You Can Affect Your California Paycheck

Though some of the withholding from your paycheck is non-negotiable, there are certain steps you can take to affect the size of your paycheck. If you choose to save more of each paycheck for retirement, for example, your take-home pay will go down. That’s why personal finance experts often advise that employees increase the percentage they’re saving for retirement when they get a raise, so they don’t experience a smaller paycheck and get discouraged from saving.

Should you choose a more expensive health insurance plan or you add family members to your plan, you may see more money withheld from each of your paychecks, depending on your company’s insurance offerings.

If your paychecks seem small and you get a big tax refund every year, you might want to re-fill out a new W-4 and a new California state income tax DE-4 Form. The California DE-4 forms tells your employer how many allowances you’re claiming and how much to withhold from each of your paychecks. If you take more allowances, you might get a smaller refund but you should get bigger paychecks. Conversely, if you always owe tax money come April, you may want to claim fewer allowances so that more money is withheld throughout the year.

In the state of California your employer can’t deduct anything from your wages except what is required by state and federal law (for income taxes, for example) or what you authorize yourself (for your health insurance premiums, for example). Union workers, however, may see legal deductions that don’t fall in either of these categories if such deductions are authorized by your collective bargaining agreement. An example of this kind of deduction is a pension payment.