Tax Rates

• Tax is assessed on a progressive schedule with rates ranging from one percent to 9 3/10 percent. Married couples and heads of household pay at the same rate as individuals, but income brackets are doubled. The schedule begins with a 1 percent tax on income of $7,168 and taxpayers with lower income pay no tax. One percent is added for approximately $10,000 in income and the highest rate is assessed on incomes of $47,056 and above.
  
  

Mental Health Services Tax

• In November 2004 California voters passed Proposition 63, the Mental Health Services Act. This law imposes a 1 percent surcharge on taxable income over $1 million that is reported and paid as income tax. This portion of income tax is restricted to support of county mental health programs that provide prevention, intervention and services to children, youth, adults, older adults and families. Funds also support the mental health system with infrastructure, technology and training.
  
  

Taxable Income

• The amount of taxable income is based on the adjusted gross income reported on the taxpayer's federal tax return. Same-sex married couples and registered domestic partners who file separate federal tax returns must file a joint return or as married RDP's filing separately. These taxpayers generally combine the AGI reported on the two federal returns to calculate taxable income, but are allowed to make adjustments to achieve tax advantages comparable to those of married couples.
  
  

Reducing Taxable Income

• Exemptions are based on filing status and the number of dependents, as with federal taxes. Taxpayers may take the standard deduction to reduce taxable income, or they may itemize deductions. California does not allow the same itemized deductions as are allowed for federal taxes. No deduction may be taken, for example, for taxes paid on a new vehicle. Taxable income may also be reduced through special credits, including the renter's credit and the new jobs credit.
  
  

How to File

• The Franchise Tax Board provides guidance for taxpayers through publications available, along with comprehensive information, at its website (see Resources). Tax returns are due on April 15 and may be filed by mail or by electronic filing. The state's ReadyReturn system provides qualifying taxpayers with a completed return based on the previous year's filing and the current year's income information. The taxpayer simply reviews the return, makes any necessary changes and files electronically.