Recent California Tax Law Changes in 2023
The state of California has a complex tax system that impacts both individuals and businesses. It is important for taxpayers to stay informed about the latest California tax law news to ensure that they are in compliance with the law and paying the correct amount of taxes. Here is a breakdown of some of the latest California tax law news:
Changes to the California Earned Income Tax Credit
The California Earned Income Tax Credit (CalEITC) is a credit available to low-income taxpayers to help offset the burden of paying taxes. In 2021, the CalEITC was expanded to provide additional assistance to families with children aged 6 to 17. The credit has also been extended to include those who receive unemployment benefits. To be eligible for the CalEITC, taxpayers must have earned income from employment or self-employment and meet certain income and residency requirements.
Increase in the California Minimum Wage
Effective January 1, 2022, the minimum wage in California will increase to $14 per hour for businesses with 26 or more employees and $13 per hour for businesses with 25 or fewer employees. This increase will impact businesses in California by increasing their labor costs, which may affect their profitability. It will also impact individuals who are paid minimum wage, as they will receive a higher wage.
Changes to the California Sales and Use Tax
Effective April 1, 2022, the California sales and use tax rate will increase from 7.25% to 7.5%. This increase will affect the cost of goods and services in California, as the tax will be applied to a wider range of items. The state of California has also expanded the sales tax to include certain digital goods and services, such as streaming services and e-books.
Changes to the California Personal Income Tax Rates
Effective January 1, 2021, the California personal income tax rates were modified to reflect changes in the federal tax rates. The changes to the California personal income tax rates are as follows:
Taxable income of $0 to $8,908: 1%
Taxable income of $8,909 to $20,883: 2%
Taxable income of $20,884 to $32,960: 4%
Taxable income of $32,961 to $45,753: 6%
Taxable income of $45,754 to $57,838: 8%
Taxable income of $57,839 to $295,373: 9.3%
Taxable income of $295,374 or more: 10.3%
Changes to the California Corporate Tax Rates
Effective January 1, 2021, the California corporate tax rates were modified to reflect changes in the federal tax rates. The changes to the California corporate tax rates are as follows:
Taxable income of $0 to $50,000: 8.84%
Taxable income of $50,001 to $1 million: 8.84% plus a surtax of $4,420
Taxable income of $1 million or more: 8.84% plus a surtax of $34,790
Overall, the latest California tax law news has the potential to significantly impact both individuals and businesses in the state. It is important for taxpayers to stay informed about these changes and how they may affect their tax situation. If you have any questions or concerns about the latest California tax law news, it is always a good idea to consult with a tax professional or seek guidance from the California Franchise Tax Board.