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California Prop 30 Reminder

As the world morns the passing of Nelson Mandela, we know that the certainty of death looms over us all.  Another unavoidable certainty relates to taxes.  In California, proposition 30 reminds us about the changes that took effect retroactively to January 1, 2012. California income tax rates increased for taxpayers with taxable income of more than $250,000. This change created three new upper income tax brackets for California as shown in the table below.

Taxable Income                     Filing   Status

Tax   Rate

$250,001 – $300,000      Single or Married Filing Single$340,001 –   $408,000    Head of Household$500,001 –   $600,000    Married Filing Joint

10.3%

(Increase   of 1%)

$300,001 –   $500,000    Single or Married Filing Single$408,001 –   $680,000    Head of Household$600,001 – $1,000,000 Married   Filing Joint

11.3%

(Increase   of 2%)

$500,001 and   over       Single or Married Filing Single$680,001 and   over       Head of Household$1,000,001 and   over    Married Filing Joint

12.3%

(Increase   of 3%)

 

Mental Health Surcharge
The 1% mental health surcharge will still apply to taxpayers with more than $1 million of taxable income.

It is important to keep these changes in mind as they impact estimated tax payments for the year ending 2013. Not adjusting your estimated tax payments accordingly will result in an underpayment.  Underpayments on California Franchise Tax cause penalty assessments from the state.

If you have any questions about this new tax change or any questions regarding your tax plan, please contact us.

Daniel R. Litvin, CPA/MBA

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