California tax notes
- Highest top marginal income tax rate in the US: 13.3% above $1M. The effective top rate reaches ~14.6% once the 1.3% SDI payroll surcharge (2026, no longer wage-capped) is added on top of the 13.3% income tax.
- $800/year minimum LLC franchise tax (one of the highest in the country) — affects all CA LLCs regardless of income.
- Mello-Roos special assessments are common in newer subdivisions and are NOT deductible as property tax (they're special assessments).
- PTET available — after OBBBA raised the SALT cap to $40,400 (2026), California's PTET election mainly helps S-corp owners with modified AGI above ~$505,000, where the cap phases down toward $10,000; for them it can still save $10k-$30k+ a year.
Sample tax numbers for California
Quick orientation — use the full calculator for your actual situation.
Tax moves that matter most for California
If you have any pass-through business income (S-Corp, partnership, multi-member LLC), California allows the PTET election that effectively bypasses the federal SALT cap on the state income tax portion. Typical savings for high earners: $2k-$15k/year.
At net SE income above ~$80k-$100k, electing S-Corp typically saves $5k-$15k/yr in self-employment tax — the math is largely federal but affects California state tax via PTET (if applicable).
If you have 1099 income, Solo 401(k) lets you contribute up to $72,000/yr (2026) — far more than SEP-IRA in most cases. Reduces both federal and California state income tax.
Run your California numbers
Open the full optimizer with California pre-selected to see your specific tax picture.
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