If you’ve ever looked at your paycheck in California and wondered where a big chunk of it went, you’re not alone. Taxes can significantly reduce take-home pay, especially in a state like California that has both state and federal tax obligations. Knowing how much is taken out and why can help you budget more effectively and plan your financial goals.
In this guide, we’ll break down the different types of taxes that come out of a paycheck in California, explain how they’re calculated, and show you what to expect as a wage earner in 2025.
Understanding the Tax Structure in California
California employees are subject to multiple layers of taxation: federal income taxes, state income taxes, and payroll taxes like Social Security and Medicare. Each of these withholdings serves a different purpose and is calculated differently. The exact amount withheld depends on your income level, tax filing status, number of allowances or dependents claimed, and whether you have any additional voluntary withholdings.
In general, California is known for having a progressive tax system, meaning the more you earn, the higher the percentage of tax withheld.
1. Federal Income Tax Withholding
Federal income tax is the largest tax typically withheld from your paycheck. The IRS uses your W-4 form (the one you fill out when you start a new job) to determine how much to withhold based on your filing status and number of dependents.
In 2025, federal income tax rates range from 10% to 37%. Most employees will fall somewhere between the 12% to 24% bracket depending on their annual earnings.
The IRS tax brackets for 2025 are:
- 10% on income up to $11,600 (single) / $23,200 (married)
- 12% to 24% for middle-income earners
- 32% to 37% for higher-income brackets
Note: Federal tax rates apply equally across states, so this portion of withholding remains the same whether you live in California or elsewhere.
2. Social Security and Medicare (FICA Taxes)
Social Security and Medicare taxes—collectively known as FICA—are required federal payroll taxes:
- Social Security tax: 6.2% of your gross income up to a wage limit ($168,600 in 2025).
- Medicare tax: 1.45% of all income with no cap.
- Additional Medicare tax: 0.9% on income over $200,000 for single filers or $250,000 for married joint filers.
Combined, most workers pay 7.65% of their income in FICA taxes, with their employer matching this amount.
3. California State Income Tax
Unlike some states that have no income tax, California has one of the highest state income tax rates in the country. The state uses a progressive tax rate system, with rates ranging from 1% to 12.3% in 2025.
Here’s a breakdown of California’s income tax brackets for 2025 (for single filers):
- 1% on the first $10,099
- 2% on $10,100 to $23,942
- 4% on $23,943 to $37,788
- 6% on $37,789 to $52,455
- 8% on $52,456 to $66,295
- 9.3% on $66,296 to $338,639
- 10.3% to 12.3% on income above that
California also has a 1% Mental Health Services Tax on income above $1 million.
Your California state withholding is calculated based on your income, exemptions claimed, and filing status. If you claim more exemptions or withhold less, your take-home pay increases—but you might owe more at tax time.
4. State Disability Insurance (SDI)
California also requires workers to contribute to the State Disability Insurance (SDI) program. In 2025, the SDI rate is 0.9% on income up to $168,600, which helps fund temporary disability and paid family leave benefits.
Employers deduct SDI from employee wages automatically, and it’s not a federal tax—only California requires it.
5. Local Taxes in California?
Unlike some other states, California does not levy local or city income taxes, so you won’t see additional deductions based on where you live (e.g., Los Angeles or San Francisco). However, local sales taxes do apply when making purchases, which is separate from paycheck deductions.
Example Breakdown of a $5,000 Monthly Paycheck in California
Let’s say you earn $5,000 a month ($60,000 per year) and are single with no additional withholdings:
- Federal income tax: ~$500 to $800 (depending on bracket)
- Social Security: $310 (6.2%)
- Medicare: $72.50 (1.45%)
- California state income tax: ~$150 to $350
- SDI: $45 (0.9%)
Estimated total taxes withheld: $1,100 to $1,600
Estimated take-home pay: $3,400 to $3,900
This is just a rough estimate. Your actual withholdings may differ based on your W-4 choices, deductions, and any voluntary benefits or retirement contributions you make.
Conclusion
Taxes are a significant part of your paycheck in California, and understanding how much is withheld—and why—is crucial for smart budgeting. Between federal, state, and payroll taxes, a noticeable portion of your earnings goes toward obligations that support social programs, infrastructure, and public services.
Whether you’re a first-time employee or a seasoned worker, reviewing your paystub regularly and understanding how your withholdings are calculated helps you avoid surprises at tax time. If your income changes or you’re unsure about your withholdings, it’s wise to revisit your W-4 form or consult with a tax professional to make adjustments.
FAQs
How much is taken out of my paycheck in taxes in California?
On average, between 20% and 35% of your gross income is withheld for taxes in California when combining federal, state, and payroll taxes.
Do I have to pay both federal and state taxes in California?
Yes, employees in California must pay both federal and state income taxes, along with payroll taxes like Social Security, Medicare, and SDI.
What is California SDI, and why is it on my paycheck?
SDI stands for State Disability Insurance. It’s a 0.9% tax on wages used to fund short-term disability and paid family leave benefits in California.
Are there any local or city taxes in California?
No, California does not have local or municipal income taxes that come out of paychecks.
Can I reduce the amount taken from my paycheck?
Yes, by adjusting your W-4 form to claim more allowances or exemptions, you can reduce your withholding. However, this might lead to a higher tax bill later if too little is withheld.
