State Tax Profile

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State Tax Profile

The State of California tax system is composed of a range of taxes that are administered and collected by various state and local agencies.  Each tax has a different base, rate and administering agency.  The following outlines the most significant taxes.

 

Type   Base of Measure  Rate Base of Measure 
Corporation Income and Franchise Tax Net income apportioned to California 8.84% Franchise Tax Board
Sales and Use Tax Receipts from sales or lease of taxable items 7.25% - 8.25% Board of Equalization
 Unemployment Insurance Tax First $7,000 of wages per employee per year 3.4% Employment Development Department
Workers' Compensation Insurance Payroll and Occupation Variable Department of Industrial Relations
Personal Income Tax Taxable personal income 1;0% - 9.3% Franchise Tax Board
 Property Tax Assessed valuation 1.0% of taxable value County Government

Disability Insurance(Employee-paid)

First $31,767 of wages 0.8% Employment Development Department

Finished goods, raw material and inventory tax

None None None
Mineral severance None None None
Inheritance None None None

 

The state has numerous incentives in place to encourage investment and reduce the cost of starting and operating a business in California.  These programs include tax assistance in various forms:

  • Credits for the purchase, lease or construction of manufacturing equipment
  • Tax credits for research and development costs
  • Employment training assistance
  • Industrial development bonds and pollution control financing