States that use a tiered income tax system assign a rate to a specific income tax bracket that increases with the amount earned in the year. This system may seem a little daunting at first, but knowledge of it can be of great use when you prepare for the tax season. California, in particular, is second only to Hawaii in having the most tiered income tax brackets, and the rate starts at 1% and climbs all the way up to the country’s highest tax rate, 13.3%, according to the Tax Foundation.
How these levels work is if you earned less than $9,325 for the year, then you would be required to pay 1% in income taxes after taking away a standard individual deduction of $4,803. Those who earned between $9,326 and $22,107, would be taxed at a rate of 2%. Next, income levels that fall between $22,108 and $34,892, would see their earnings taxed at 4%. If your annual income reached the range of $34,893 to $48,435, then you fall in the 6% bracket.
Those with yearly earnings of $48,436 to $61,214 would be looking at a rate of 8%. Income between $61,215 and $312,686 would be taxed at 9.3%. Earnings that range from $312,687 and $375,221 are taxed at 10.3%. Income from $375,222 and $625,369 see an 11.3% rate. Upper tiers earning between $625,370 and $1 million are taxed at 12.3%, and finally, any earning over $1 million would be subject to a 13.3% tax.