All governments around the world need sustainable funding to foster economic and social growth of the country.Taxation is the primary means to finance these developments and meet their strategic economic aims. Taxation not only acts as an instrument of the economic policy of the nation but also plays an important role in its employment, price stability and taming cyclical fluctuations.
Tax is an enforced fee that is charged by the government and applied, against individuals and organizations, on their income, products, and services. Though a civic duty for national growth, taxation is administered and implicated with all fairness and integrity by the authoritarian body of the US, the Internal Revenue Service (IRS).
In America, taxes are levied at local, state and federal levels with different structures and patterns. These taxes are reviewed annually and published in tax tables. There are separate tax tables for each state and federal tax tables which typically change each year to match inflation. A quick review of the California tax tables ((((link California tax tables))))) clearly shows that, of all the states, California has the highest taxes in the United States of America, thus making it an expensive place to live. The California tax calculator is a great tool for calculating and comparing state and federal taxes as well as providing salary after tax calculations and estimating annual tax returns.
California has become the “winner-take-all economy” due to the combination of high taxes and steady increase of high earners (California constantly attracts more millionaires). Residents pay state income tax, state property tax, state sales tax, and capital gains tax, all at comparatively high tax rates which adds to the high cost of living in California.
California Income Tax
The Golden State has a progressive income tax with nine tax brackets ranging from 1% to 12.3% and an additional 1% surcharge as part of the Mental Health Services Act that makes it to whopping 13.3%, the highest in the entire nation. However, mental health service tax is paid by just 1% of the population, most of them paying in the middle range tax rate. So, the more you earn the more tax you need to pay.
California Sales Tax
Everyone who resides in or visits California has to pay state sales tax of 7.25%, one of the highest sales tax rates. Sales tax is applied against most tangible goods except groceries, prescription drugs, and other utilities like electricity and gas. Sales tax is applied at the point of sale.
Additional Tax Considerations in California
Moreover, if you are fond of partying, then be prepared to pay extra tax in addition to sales tax on alcoholic beverages, tobacco products, and gasoline. The rate of taxes on these items are assessed on their quantities and implied accordingly.
The state property tax is paid by all land and homeowners of California. This tax is based on the purchase price of the property which is the assessed value of the property. Property prices have steadily grown with demand leading to an increase in assessed value by rate of inflation every year, subsequently the taxes on property increases by approximately 2%.
Capital gains taxis levied on all capital gains, which the state considers as income, pushing some tax payers into the highest tax bracket, thus higher tax rate. The capital gains rate of California is the highest in the world.
With the overwhelming taxes of California, you need to ensure that you pay the right level of tax and dont waste a single dime, you are entitled to, on overpaid tax. In these modern times, there are websites that assist you in reviewing your earnings and evaluating taxes on your income. The California tax calculator can estimate the amount of income tax you need to pay and allows you to budget for your annual tax return as you earn
By knowing the amount of deductions, allowances, and with holdings, you can save the taxes and keep as much of your income as possible to yourself.