Introducing California income tax analysis on PolicyEngine

Expanding our tax calculator and reform simulator capabilities to the most populous state.

We thank AllHome for supporting this model enhancement.

We are thrilled to announce the expansion of PolicyEngine to include the California income tax code! This update enables users to examine, comprehend, and adjust tax policies in California — from rates and brackets to deductions and credits.

California has nine tax brackets, with rates ranging from 1% to 12.3% and thresholds up to $1.35 million, depending on filing status. In addition, California levies a 1% tax on income above $1 million and a use tax of roughly 0.009% of income.

Like on federal income taxes, California filers can take either a standard or itemized deduction when determining their taxable income. The standard deduction is $5,202 for single and married filing separately filers, and double that for others. Itemized deductions mostly mirror the federal set, though California starts to cap their value at income above about $230,000, depending on filing status. California filers can also subtract taxable Social Security payments from their state adjusted gross income.

PolicyEngine also models several California tax credits:

• California Earned Income Tax Credit (CalEITC) applies multipliers to a modified version of the federal EITC for filers with some earned income below $30,000

• Young Child Tax Credit (YCTC) provided up to $1,083 to filers eligible for CalEITC (with some exceptions) and children under age six

• Child and Dependent Care Credit matches up to 50% of the federal program of the same name, for filers with up to $100,000 income

• Exemptions of $140 per filer and spouse, and $433 per dependent; all exemptions phase out starting at income above about $230,000, depending on filing status (the same thresholds as the itemized deduction cap)

• Renter credit provides $60 to single filers who pay rent and have income below $49,220; California doubles the amount and threshold for other filer types

All values reflect the 2022 tax year. As California bases its inflation adjustments on mid-year price levels, we cannot yet enter 2023 tax parameters.

The integration of the California income tax code into PolicyEngine allows users to gain a deeper understanding of the impact of tax policies on California residents. Users can now simulate different policy scenarios, assess the effects of proposed tax reforms, and delve into the details of California state income tax.

We invite you to explore the new California tax policies on PolicyEngine and see how they influence your tax situation or the broader population. Our team is dedicated to expanding the platform’s capabilities and delivering the most comprehensive tax policy analysis tool available. Keep an eye out for more updates and new features!

Max Ghenis, Nikhil Woodruff, Martin Holmer, and Josh Marsh developed PolicyEngine’s California state income tax model.

max ghenis
PolicyEngine's Co-founder and CEO

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