INCOME TAX

Income taxes are calculated based on income. The tax authority takes a portion of your income, in the form of a tax.

Income tax is a direct tax that a government levies on the income of its citizens. The Income Tax Act, 1961, mandates that the central government collect this tax. The government can change the income slabs and tax rates every year in its Union Budget. Income does not only mean money earned in the form of salary.

While federal tax rates apply to every taxpayer, state income taxes vary by state. Some states have a flat tax rate, marginal tax rate, or don’t have any state taxes at all.

PROPERTY TAX

Property taxes are calculated based on value of the property. These property taxes are different from income taxes. These taxes are calculated on the value of the taxpayer’s property and not on the taxpayer’s income.

The average effective property tax rate in California is 0.73%, compared to the national rate, which sits at 1.07%.

SALES TAX

In California, sales tax is collected and used by the State of California, and sales tax is, in fact, the main source of revenue for the State of California

The statewide tax rate is 7.25%. In most areas of California, local jurisdictions have added district taxes that increase the tax owed by a seller. Those district tax rates range from 0.10% to 1.00%. Some areas may have more than one district tax in effect.

SELF EMPLOYMENT TAX

For one thing, you can (generally) deduct more business expenses when you work for yourself than when you’re an employee. But, on the other hand, he also has to pay Self Employment Tax on any net profit he makes from his business.

How much is the self employment tax for California? A self employed individual who makes a profit (income minus expenses) of $400 or more will have to pay California self employment tax. This amount of 15.3% covers a Social Security payment of 12.4% and a Medicare payment of 2.9%. 28 sept 2020

PAYROLL TAXES

Being an employer takes some important responsibilities. Making sure all workers are properly classified as employees or independent contractors and making sure taxes are withheld and paid in a timely manner are critical.

California has four state payroll taxes: Unemployment Insurance (UI) and Employment Training Tax (ETT) are employer contributions. State Disability Insurance (SDI) and Personal Income Tax (PIT) are withheld from employees’ wages.

FICA TAXES

The FICA tax must be paid by entrepreneurs in all states; it is a federal tax. There are also other taxes that are specific to the state in which the employer has employees. In the State of California, for example, we have: State unemployment insurance and the state disability tax.

The money you pay in taxes is not held in a personal account for you to use when you get benefits. Today’s workers help pay for current retirees’ and other beneficiaries’ benefits. Any unused money goes to the Social Security trust funds to help secure today and tomorrow for you and your family.