Bad news for California. Other states are dropping their state income tax rates for the well-to-do, making those states ever more attractive for wealthy folks — compared to the money-grabbing Golden State.
In 2015, CA was “only” 21% higher than the 2nd highest state — Hawaii. But starting in 2016 Hawaii has dramatically cut their top rate from 11% to 8.25%. A very liberal state, Hawaii’s politicians nevertheless figured out that it should welcome rich people rather than drive them away.
That locks in California’s “worst” rank among the 50 states. With our 13.3% top tax rate, we are now 34% higher than the 2nd highest state. Oregon is #2, with a top rate of 9.9% — down from the 11% they charged a couple years ago.
Below is my updated summary of the CA income tax, as found in my constantly updating fact sheet comparing CA with the other 49 states. Note the update to the nation’s highest tax brackets (in bold):
Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at under $50,000 for people filing as individuals. 10.3% started at $1 million.
Now our “millionaires’ tax” rate is 13.3% – including capital gains (CA total capital gains tax rate is now the 2nd highest in the world!). 10+% taxes now start at $250K.
CA now has by far the nation’s highest state income tax rate. We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest – including 7 states with zero state income tax – and 2 more that tax only dividends and interest income.
CA is so bad, we also have the 2nd highest state income tax bracket.
AND the 4th!! [That is correct — our 4th highest state income tax bracket is STILL higher than the HIGHEST bracket in any other state.]