There are nine California state income tax rates and brackets, which are based on your level of taxable income. The technical term is a “progressive tax structure”—which simply means the more you earn, the higher your tax rate is.

Yes, state and federal tax brackets differ. Federal brackets are set by the IRS for all U.S. taxpayers, while each state sets its own brackets. Some states have a progressive system like the federal one, other states tax all income at the same rate, and some states have no income tax. Understanding both federal and state tax brackets is key when planning for taxes.

Federal tax brackets change yearly due to inflation adjustments, a process known as "indexing for inflation." This prevents "bracket creep," where inflation, not real income increase, pushes people into higher tax brackets or reduces the value of credits or deductions. These adjustments ensure income isn't taxed more heavily from one year to the next due to inflation.