California income tax guide for individuals and businesses
A plain-English overview of California individual and business taxes for 2026: rates, forms, deadlines, sales tax, payroll and multi-state rules, with CPA help when you need it.
California at a glance
| Individual income tax | Graduated, top rate about 13.3% |
|---|---|
| Main resident return | Form 540 |
| Business taxes | Corporate income tax, about 8.84%. LLCs and S corporations owe a yearly minimum franchise tax ($800), and LLCs also pay a fee based on gross receipts. Elective pass-through entity tax available. |
| Sales tax | About 7.25% state rate |
| Local taxes | Districts and cities add to the 7.25% base rate. Sales tax is administered by the CDTFA, not the FTB. |
| Individual return due | April 15 |
| Tax agency | California Franchise Tax Board (income tax) and CDTFA (sales tax) |
| Wage reciprocity | No wage reciprocity agreements are commonly listed for this state |
Individuals
California has a graduated individual income tax (about 13.3% at the top). Residents generally file Form 540 and start from their federal income.
Nonresidents and part-year residents who earn income from California sources (for example wages for work performed in California, rental property or a business here) generally file the nonresident or part-year version of the return or a schedule. Your home state normally gives a credit for tax paid to California, so the same income is rarely taxed twice.
Good to know: California has the highest top personal rate in the country (13.3%, including a 1% surcharge over $1 million) and often does not follow federal tax law changes.
Businesses
Entity-level taxes: Corporate income tax, about 8.84%. LLCs and S corporations owe a yearly minimum franchise tax ($800), and LLCs also pay a fee based on gross receipts. Elective pass-through entity tax available.
Pass-through businesses. S corporations, partnerships and most LLCs pass income to their owners, who report it on personal returns. Many states, including a large number of those that tax income, offer an elective pass-through entity tax (PTET) that can help work around the federal limit on deducting state taxes. Ask us whether it fits California and your situation.
Sales tax. About 7.25% state rate. Districts and cities add to the 7.25% base rate. Sales tax is administered by the CDTFA, not the FTB. After the Wayfair decision, out-of-state sellers can owe sales tax once their sales into California pass the state's threshold, even with no office there.
Payroll. Employers must register for state income tax withholding (where the state has an income tax) and for state unemployment insurance before the first payroll, and report new hires. Workers' compensation insurance is also required in most cases.
Annual filings. Most states also require corporations and LLCs to file a yearly report or pay a fee to the Secretary of State.
Working in more than one state
California is not commonly listed as having wage reciprocity with other states, so people who live in one state and work in another usually file nonresident returns and claim a credit at home.
Working or living in more than one state, or moving during the year? See our multi-state tax guide.
Compliance calendar snapshot
| When | What |
|---|---|
| January 15, April 15, June 15, September 15 | Federal estimated tax payments. Most states with an income tax follow similar dates. |
| April 15 | California individual return due date (calendar-year filers) |
| Monthly or quarterly, usually the 20th of the next month | State sales tax returns and payroll withholding deposits, depending on volume |
| Quarterly (end of month after quarter) | State unemployment insurance and withholding reconciliation returns |
| Yearly, on the entity's anniversary or by a fixed date | Secretary of State annual report or franchise fee |
Common questions
What is the California income tax rate for 2026?
California has graduated rates with a top rate of about 13.3%. Rates, brackets and credits change, so confirm with the California Franchise Tax Board (income tax) and CDTFA (sales tax).
Which form do I file for California income tax?
Residents generally file Form 540. Nonresidents and part-year residents use the nonresident or part-year version or a schedule. The state agency's website has the current forms and instructions.
Do I need to file a California return if I live in another state?
If you earned income from California sources (wages for work performed here, rental property, or a business or partnership interest), you may need to file in California even if you live elsewhere. Your home state usually gives a credit for tax paid to another state.
Does California have reciprocity with other states?
California is not commonly listed as having wage reciprocity. Reciprocity applies only to wages and there are exceptions, so confirm before you stop withholding.
What business taxes apply in California?
Corporate income tax, about 8.84%. LLCs and S corporations owe a yearly minimum franchise tax ($800), and LLCs also pay a fee based on gross receipts. Elective pass-through entity tax available. Sales tax, payroll withholding and unemployment insurance may also apply.
General information only, for tax year 2026. Rates, forms and rules change and have many exceptions. Confirm with the state agency or contact us before you act. Rates shown are approximate top or flat rates.
Let's talk about your taxes, your business, your plans.
Tell us what you need and we will get back to you quickly. There is no pressure: just a friendly conversation and a clear next step.
4260 Westbrook Dr, Suite 107
Aurora, IL 60504
Monday to Friday, 9:00 am to 5:00 pm, by appointment. Saturday and Sunday by appointment when needed.