Originally Posted by iahflyr
CA state income tax is really not as bad as some people make it out to be. If you are married, the first $537,500 of your income is taxed at a marginal tax rate of 9.3%. However, California's income tax is highly progressive. The first $105,224 is taxed at an effective tax rate of only 4.4%. That's actually below average for many states. Even if you make 250k a year, your effective tax rate is 7.2% (Before any write-off's) For comparison, 43 out of 50 states charge state income tax, and the average effective state income tax rate is 5%.
State income tax is deductible on your federal taxes if you itemize. So if you're in a ~30% federal tax bracket, you'll get to write-off 30% of that 7.2% you paid in state taxes on your federal tax return. So your effective state tax rate would be 5%. Throw in some other federal write-offs (mortgage interest, charity, etc...), and your true effective state tax rate gets into the mid 4% range, depending on your situation, for making 250k.
California's property tax rate is also significantly lower than other states (Roughly 1% of the home value, and can not increase more than 2% annually). You'll find that owning property in California is also quite profitable.
People get all worked up over CA state income tax, but ~4.5% of your income if you make 250k is a very small price to pay for living in CA. It's worth it for the weather, scenery, things to do, beaches, mountains, wineries, you name it.
Originally Posted by
UALfoLIFE
Where did you get your info from? It’s all wrong.
https://www.ftb.ca.gov/forms/2017-Ca...ions.shtml#itr
Scroll down to Schedule Y (Married filing jointly). I think I used the 2016 numbers instead of 2017, but that doesn't make a difference (It actually means you pay slightly less than I quoted above). Care to tell me what you think is so wrong??
Originally Posted by ZeroTT
Sorry dude - state and local income tax deduction is now capped at $10k/yr for your federal return.
Yes, the GOP tax reform bill raised taxes on a lot of upper middle class taxpayers, especially pilots. I really hope it gets repealed, or they at least increase the SALT deduction above 10k. Whatever happened to the GOP being the party of no double taxation?? I remember when I used to vote for the GOP it was that way. Not anymore apparently.
However, if you make 250K, you have an effective CA state tax rate of 7.2%, that means your CA state income tax is 18k. However if you have any other federal deductions (charity, mortgage interest), it's even less. You can write-off 10k of it on your federal taxes. So maybe your true effective state tax rate goes from mid 4% to ~5%. It's still really not that much. Yes I would vote to lower it slightly, or hope that GOP tax reform is repealed or altered regarding the SALT deduction. But regardless, CA state income tax is not this monstrous thing most people make it out to be.