State Income Tax
: 1% to 10.3% State Sales Tax
: 7.25% Estate Tax/Inheritance Tax
The Golden State has lost its luster for many retirees. Although Social Security benefits are exempt from state income taxes, all other forms of retirement income, including public and private pensions, IRAs and 401(k) distributions are fully taxed. Californians pay some of the highest income taxes in the U.S. The top bracket of 9.3% kicks in at just $48,942 of taxable income for individuals and $97,884 for married couples filing jointly; millionaires in any filing status pay an extra 1% tax on income. California applies the same tax rate to both earned and investment income. State and local sales taxes can reach 9.25% in some cities, although food and prescription drugs are exempt. Real estate is assessed at 100% of market value, but taxes are capped at 1% of assessed value (property is generally only reappraised when it changes ownership or has new construction).
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