With the latest tax season upon us it is worth reviewing some of the key tax changes for Californian residents and tax filers. As the most populous state in the union with high average incomes it is no surprise that Californian residents pay more taxes than those of any other state. So taxes are an important topic for many.
The California Franchise Tax Board (FTB) manages the administration and collection of taxes and related programs for individuals and corporations in the state. Generally, you have to file a California state tax return if you’re an income earning resident or part-year resident or a non-resident who earned income from a source in California.
You can use the same tax software to file federal and state tax returns. There is also an option to use the states CalFile to file your return directly with the FTB and for free if your earnings are below certain (AGI) income thresholds ($203,431 for single filers and $406,687 for married filers).
The focus in this article is around state specific taxes and changes for the latest tax season. For federal tax changes that will impact the latest tax season, see this article.
Checking the Status of Your Refund and Expected Refund Processing Time
As was the case with federal tax return processing, residents have also faced long delays in getting their state refunds. Pandemic related staffing shortages and the introduction of many federal and state tax breaks placed extra burdens on local agencies which in turn delayed validation and processing of many state tax returns.
It typically takes up to three weeks to process refunds for e-filed California returns, and up to four weeks for mailed returns. Some returns may take additional time to review, if manual verification is required, impacting refund processing.
Key Tax Considerations in CA For 2021-2022 Tax Filings
Multiple rounds of Golden Stimulus checks were paid to millions of qualifying families and individuals to support them during the COLVID induced economic slowdown and from the severe unemployment experienced by many during the peak of the pandemic.
Missing GS I or II payments? If you didn’t get the golden stimulus checks (you must have filed your 2020 taxes) and you felt your income levels were below the required qualification levels, you can claim it via your state tax filing or see the FTB website for retroactive payment options.
Fraud is on the rise. As has been the case over the last few years, tax fraud is on the rise and all state revenue and tax agencies are reminding taxpayers to take steps to protect themselves from scam artists seeking to steal refunds and identities.
Wildfire Disaster Deductions. Given the horrible wildfires this year, Taxpayers affected by governor-declared California wildfires may claim a disaster loss as a state tax deduction (see details) in the tax year when the disaster occurred. They also may file an amended or original return from the year before the disaster occurred.
Note – Proposed 2022 Inflation Relief Payments will start being paid in late 2022. See more in this article.
California Earned Income Tax Credit (CalEITC)
Californians with income up to $30,000 may qualify for CalEITC. Those who are eligible for CalEITC and have a child age five or younger also may receive up to $1,000 from the Young Child Tax Credit (YCTC). In addition, people earning less than $57,414 also may qualify for the federal EITC.
Between CalEITC, YCTC, and the federal EITC, a family can receive up to $10,888. For more information about these credits, visit www.ftb.ca.gov/caleitc.
Qualifying Health Care Coverage Penalties
Californians who did not have qualifying health insurance throughout the year are subject to a penalty of $800 or more when they file their state tax returns. The penalty for a dependent child is half that of an adult; a family of four could face a penalty of $2,400 or more. If you had health coverage in 2021, check the “Full-year health care coverage,” box 92, on your state tax return to avoid penalties.
California (CA) Tax Brackets by Filing Status
The California state tax income rates range from 1% to 12.3% depending on taxable income and filing status. State taxes are due in line with federal tax filing deadlines, unless a state holiday or exception is noted. If you can’t pay your California state tax bill on time, you can request a one-time, 30-day delay.
Tax Brackets and Rates for Single Filers
|CA Tax rate||Taxable income bracket||Tax owed|
|1%||$0 to $9,325.||1% of taxable income.|
|2%||$9,326 to $22,107.||$93.25 plus 2% of the amount over $9,325.|
|4%||$22,108 to $34,892.||$348.89 plus 4% of the amount over $22,107.|
|6%||$34,893 to $48,435.||$860.29 plus 6% of the amount over $34,892.|
|8%||$48,436 to $61,214.||$1,672.87 plus 8% of the amount over $48,435.|
|9.3%||$61,215 to $312,686.||$2,695.19 plus 9.3% of the amount over $61,214.|
|10.3%||$312,687 to $375,221.||$26,082.09 plus 10.3% of the amount over $312,686.|
|11.3%||$375,222 to $625,369.||$32,523.20 plus 11.3% of the amount over $375,221.|
|12.3%||$625,370 or more.||$60,789.92 plus 12.3% of the amount over $625,369.|
Tax Brackets and Rates for Married Filers
|Tax rate||Taxable income bracket||Tax owed|
|1%||$0 to $18,650.||1% of taxable income.|
|2%||$18,651 to $44,214.||$186.50 plus 2% of the amount over $18,650.|
|4%||$44,215 to $69,784.||$697.78 plus 4% of the amount over $44,214.|
|6%||$69,785 to $96,870.||$1,720.58 plus 6% of the amount over $69,784.|
|8%||$96,871 to $122,428.||$3,345.74 plus 8% of the amount over $96,870.|
|9.3%||$122,429 to $625,372.||$5,390.38 plus 9.3% of the amount over $122,428.|
|10.3%||$625,373 to $750,442.||$52,164.17 plus 10.3% of the amount over $625,372.|
|11.3%||$750,443 to $1,250,738.||$65,046.38 plus 11.3% of the amount over $750,442.|
|12.3%||$1,250,739 or more.||$121,579.83 plus 12.3% of the amount over $1,250,738.|
You can see the IRS federal tax brackets here