California Raises State Income Taxes for High-Income Earners
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At the end of September, California Governor, Gavin Newsom, signed legislation (SB No. 951) that will increase the marginal income tax rate from 13.3% to 14.4% in 2024 for those making more than $1 million.
The State of California is touting this Bill as one that will “expand support for working families” as it will “boost leave benefits for lower- and middle-income employees to cover more of their regular income while they take much-needed time off to care for loved ones,” according to a statement published by the Office of Governor Gavin Newsom.
Currently, employees can receive up to 70% of their regular wages while taking up to eight weeks of leave with the birth of a baby or care for a sick family member. By 2025, workers earning less than the state’s average wage could receive up to 90%. Expanded leave benefits are funded by an increase in employee-paid payroll contributions by eliminating the taxable wage limit of $145,600. The current 1.1% contribution rate can increase to as high as 1.5%.
While the Bill sounds positive, not everyone sees it as worthwhile. Because the increase in payouts will be taken from the state’s highest earners to cover leave for lower-wage workers, there is concern about the inequity in the benefits offered. Others are simply unhappy with the stealth manner in which the increase was implemented.
No matter how you perceive this upcoming tax increase, we are here to help answer any questions about how it might affect you. Contact us at 949-860-9902 or click here, and we will contact you.