California’s sunny beaches, booming tech hubs, and world-class lifestyle come at a steep cost—especially if you’re among the state’s high earners.
With a top state income tax rate of 13.3%, the Golden State holds the title for the highest personal income tax in the nation. And that’s just the beginning.
A Tax Trifecta: Income, Property, and Sales
California doesn’t stop at income tax. The state also hits hard with high sales and property taxes, making it one of the most expensive places to live and work in the U.S. For high-net-worth individuals, the tax burden can feel overwhelming:
- Top income tax bracket: 13.3% (applies to income above $1 million for individuals)
- Sales tax: Base rate of 7.25%, with local rates pushing it over 10% in some areas
- Property tax: While capped at 1% of assessed value under Prop 13, soaring real estate prices mean massive tax bills
Combined, these levies form a trifecta of financial pressure, particularly on entrepreneurs, investors, and tech professionals.
The Wealth Migration Trend Is Real
With no shortage of blue skies, California’s appeal is undeniable—but so is the exodus of wealth. Over the past few years, a steady stream of high-income earners and businesses have relocated to lower-tax states like Texas, Florida, and Nevada, citing not just cost of living, but also the impact of state taxes on long-term financial planning.
Elon Musk, Oracle, and Hewlett Packard Enterprise are just a few headline names that have shifted HQs or primary residences elsewhere.
Who Pays the Most?
California’s progressive tax structure means the top 1% of earners pay nearly half of the state’s income tax revenue. While this funds public services, it also creates a system highly reliant on wealthy individuals—leaving both the state and its top earners financially exposed during economic downturns.
Staying or Leaving?
For many, California’s lifestyle still outweighs the cost. The climate, culture, and career opportunities are unmatched. But for others—particularly retirees, remote workers, and business owners—the financial equation no longer adds up.
The bottom line?
If you’re rich in California, you’re not just living the dream—you’re also footing a sizable bill for it.
Carol McDaniel is a dedicated and results-driven professional with 5 years of experience and US News. Known for her strong problem-solving skills and collaborative mindset, Carol has built a reputation for delivering high-impact results across diverse teams and projects.
Throughout her career, she has demonstrated expertise in 2 core skills or areas, e.g., client relations and project coordination, and is passionate about continuous learning and meaningful contribution. Carol thrives in dynamic environments and consistently brings professionalism, adaptability, and a focus on growth to every role she takes on.