California – one of the largest states in USA. Like other states, you’d also need to pay income tax, property tax and sales tax in California. However, some of the procedures, tax rates, rules and regulations are quite different. If you’re living in California, you must have an idea about the tax rates, tax credit and tax relief options. However, if you’re a tourist and enjoying beach life and temperate climate, you should have knowledge about sales tax in the area in order to make sure, retailers are not charging more than required.
Sales tax is not constant all through the state. Therefore, you’re more likely to pay more in one part or county than the other one. Usually it will be around 7.25%. Doesn’t it seem to be very high? However, the sales tax rate includes local, county as well as state sales taxes out of which around 6% is the state component. Since tax rules differ from one county to the other, therefore the sales tax rate might go higher. The taxable also cannot be classified as it depends on business. If you’re buying a gift for someone, retailer might or might not charge sales tax on the gift wrapping. Some of the businesses treat it as one of the non-taxable items. If you’re buying a food to gift it to someone food is exempted from any tax however, you would need to pay tax on the gift wrapping.
If you own any property in California, you’re liable to pay real estate tax on it. But if you go through the California state tax’s website or any source from where you can get information on tax laws applied in California, you will come across various exemptions. However, they’d prove to be good, only if you know how to use them. If you think that you fall under some category of exemption, you’d need to apply to the tax assessor’s office of your local county. If you own a homestead, you’re more likely to get an exemption from local property taxes however, you should first check with the local authorities to confirm it.
Senior citizens and disables citizens of California cam get tax postponement. However, the exemption will be applied only on their principal residence which means you’d need to pay real estate tax if you own any other property except the principal one. You will also get exemption under an assistance program especially designed for renters and home owners. According to the program, as a home owner or renter, you’d also need to pay a proportion of tax amount for once a year. Tax amount will be calculated on the value of home or rent.
Now lets look at the most common type of tax i.e., income tax. It is a kind of progressive tax and depends on the amount you’re earning per annum. The state government has classified income tax into six tax bands. Moreover, if you’re earning over one million dollar in a financial year, you would also need to pay 1% surcharge.