Keystone Global Partners

Forward-Thinking Wealth Management For Tech Founder

California Quietly Increases Marginal Income-Tax Rate

High earners in California will be in for a surprise come 2024. Governor Gavin Newsom recently signed SB 951 into law, effectively increasing the top marginal income-tax rate to 14.4% for some high-income earners. 

If you didn’t know a tax increase was on the table, you’re not alone. It was part of a bill designed to increase paid family leave. Currently, employees can receive 60% to 70% wage replacement to take up to eight weeks off should they need to care for a new baby or sick family member. Under the new law, starting in 2025, that increases to 70% to 90% – the higher amount being for lower wage earners. 

Paid family leave in California is funded via a 1.1% payroll tax. Previously, earnings over $145,600 were shielded from this tax. But starting in 2024, individuals earning over $1 million per year will see their marginal income-tax rate increase 1.1%, from 13.3% to 14.4%. Those making between $61,214 and $312,686 will see their rate go up to 10.4%. (1)

SB 951 allows for the rate to be adjusted annually based on need, currently authorizing it to go as high as 1.5%. 

Sources: 

  1. https://www.wsj.com/articles/gavin-newsoms-stealth-tax-increase-california-marginal-tax-rate-11664921470

 

The information and opinions provided in this material are for general informational purposes only and should not be considered as tax, financial, investment, or legal advice. The information is not intended to replace professional advice from qualified professionals in your jurisdiction.

Tax laws and regulations are complex and subject to change, and their application can vary widely based on the specific facts and circumstances involved. Any tax information or advice in this article is not intended to be, and should not be, used as a substitute for specific tax advice from a qualified tax professional.

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