California Prop 30 - Individual Income Tax Rate Increase and Sales Tax Increase


California Proposition 30 was voted into law as a constitutional amendment on November 6, 2012 by California voters. Prop 30 substantially increases individual income tax rates for high income earners as well as state sales tax rates by 0.25%.

The income tax increase is substantial and impacts single taxpayers with taxable income in excess of $250,000 and married taxpayers with taxable income in excess of $500,000. In addition the tax increase is retroactive to all income earned or received since Jauary 1, 2012. An estimated tax underpayment penalty will not be imposed to the extent the underpayment was due to the rate changes from Prop 30. The income tax rate increase is temporary for seven years and set to expire in 2019. Here is the new tax table as summarized below.

For Single or Married Filing Separately

  • Taxable Income $250,000 to $300,000 the tax rate is now 10.30% (was 9.3%)

  • Taxable Income $300,001 to $500,000 the tax rate is now 11.30% (was 9.3%)

  • Taxable Income $500,001 to $1,000,000 the tax rate is now 12.30% (was 9.30%)

  • Taxable Income $1,000,001 and over the tax rate is now 13.30% (was 10.30%, includes Mental Health Tax of 1% for taxable income over $1,000,000)

For married filing jointly or Qualifying Widow(er) with dependent child:

  • Taxable Income $500,000 to $600,000 the tax rate is now 10.30% (was 9.3%)

  • Taxable Income $600,001 to $1,000,000 the tax rate is now 11.30% (was 9.3%)

  • Taxable Income $1,000,001 and over the tax rate is now 13.30% (was 10.30%, includes Mental Health Tax of 1% for taxable income over $1,000,000)

The California state sales tax will increase from 7.25% to 7.5% for four years beginiing January 1, 2013 and ending December 31, 2016. For your specific city please refer to the Board of Equalization website.

If you should have any questions regarding your individual circumstances and how these changes impact you, please feel free to give us a call.