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 opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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