8/17/2023 0 Comments California income tax brackets![]() Consider two people who both make $100K a year, one makes all his income in one state, the other earns $10K from each of 10 states (assume they all have the same tax rates). If you think about it, this is the fair way to tax in a progressive tax system. ![]() In other words, you still only pay California tax on California income, but your effective tax rate is determined by your worldwide income the whole year. In California (and many other states), the tax is calculated based on your worldwide income for the entire year, and then multiplied by the fraction of income that is from California. If you earned $100K a year, moved to CA on July 1st, and out of the 100K you earned 90K in August - you cannot say that only half of the income is attributed to California just because of the half-year residency. So you cannot just divide your total income by 2 because you lived half a year elsewhere, you need to check each item of income, and see to which State (or States) it should be attributed to. The income attributed to California is income earned in California, or worldwide income while CA resident. The tax rates are in the 540NR booklet, page 30 and on. Out of the total tax you calculated (see instructions for line 31), you pay the prorated amount based on the rate of the income attributed to California out of the total income (see instructions for line 37). In California, specifically, the tax is calculate on the total income and then the portion of the income that is attributed to California is calculated. Progressive tax brackets do not reset when you switch residency in most States.
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