Taxation in California

Taxes in California are collected by state and local governments through a number of tax categories.

Sales tax is imposed on retailers (not consumers) for the privilege of selling tangible personal property at retail.^[1] However, retailers are allowed (but not obligated) to obtain reimbursement for their tax liability from the consumer at the time of sale.^[2] Whether a sales tax reimbursement amount is actually added is a matter of contract between the retailer and the consumer.^[3]

Use tax is imposed on the storage, use, or other consumption in California of tangible personal property purchased from a retailer.^[4] Any person storing, using, or otherwise consuming in California tangible personal property purchased from a retailer is generally liable for the use tax.^[5] While the sales tax is imposed on retailers, the use tax is imposed on purchasers. A retailer engaged in business in California (which includes many businesses located outside of California engaging in E-commerce) is generally required to collect the use tax from the purchaser at the time of sale and provide the purchaser a receipt.^[6]

Property tax is imposed at a uniform 1% rate of assessed value due to Proposition 13. Additional taxes may be charged for bond repayment or special assessments, all of which must be voter approved (See Mello-Roos). Proposition 13 also established an acquisition value assessment system, which relates assessed value to the purchase price of the property and up to 2% annual inflation, with some exceptions.^{[citation needed]}

Income tax in California is progressive, with the top tax rate of 13.3% the highest in the country.^[7] Conversely, due to refundable tax credits provided to families with children, the bottom 20% on average pay a negative income tax rate.^{[citation needed]}

^ Cal. Rev. & Tax. Code, § 6051.
^ Cal. Civ. Code, § 1656.1.
^ Cal. Civ. Code, § 1656.1, subd. (a).
^ Cal. Rev. & Tax. Code, § 6201.
^ Cal. Rev. & Tax. Code, § 6202.
^ Cal. Rev. & Tax. Code, § 6203.
^ "California has the highest personal income tax rate in the nation". KTLA. 2022-11-28. Retrieved 2023-07-05.

[1] Cal. Rev. & Tax. Code, § 6051.

[2] Cal. Civ. Code, § 1656.1.

[3] Cal. Civ. Code, § 1656.1, subd. (a).

[4] Cal. Rev. & Tax. Code, § 6201.

[5] Cal. Rev. & Tax. Code, § 6202.

[6] Cal. Rev. & Tax. Code, § 6203.

[7] "California has the highest personal income tax rate in the nation". KTLA. 2022-11-28. Retrieved 2023-07-05.

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