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