Why California Taxes Really Aren’t That Bad

If you think California tax rates will get in the way of your retirement goals, you may be pleasantly surprised.

When it comes to perceptions about tax rates, California gets a bad wrap. While many active adults are drawn to the Golden State for its idyllic weather, diverse entertainment options, and proximity to the beach, mountains, lakes, and other natural wonders, others are put off by what they believe to be high tax burdens.

A Lower Tax Rate Than Most Other States

Fortunately, this fear is unfounded because California tax burdens are not as bad as one may believe. In fact, California state and local tax obligations fall lower than most states in the U.S., according to a recent WalletHub in-depth analysis. When WalletHub measured a person’s income contribution towards various tax burdens, they found that the tax contributions were lower than expected for low-income taxpayers (who pay 9.65 percent of their income to in-state taxes) and even for middle-class taxpayers (who pay 9.22 percent of their income to in-state taxes). This data puts California residents under the state median of 9.47 percent of income going to state taxes, with Illinois being the least tax-friendly state and Wyoming being the most tax-friendly state.

Many people mistakingly believe California’s tax rate is so high because they tend to focus on the high percentage that the very rich (the one percent) pay, which is 13.3 percent. However, that rate is only applicable to people making over $1 million annually.

Tax-Friendly for Retirees

Those looking to retire in California should consider what income they’ll be relying on because, if they’re not in that one percent of earners, the state is likely a great bet when it comes to tax rates. And unlike some other states, California doesn’t tax Social Security income. California also has the country’s 16th lowest property tax rates, at 0.77 percent.

With lower-than-average property tax rates and income tax rates, California’s high tax stereotype is just that—an unfounded belief that shouldn’t scare away active adults from all of the wonderful reasons to retire in the Golden State.

Can you spot the $207,744 difference between these identical homes?

Financing is the difference!

Get the details in The 62+ Loan Homebuyers Guide.

55places Mortgage is a joint venture between Mutual of Omaha Mortgage and 55places.com.
Details here.

We're here to help! (800) 928-2055

Call us to speak with a customer service representative.

Subscribe to Our Newsletter

Get Weekly Updates

I agree that 55places and its affiliates, partner providers or agents may call, text, or email me about my inquiry, which may be made with automated means. I understand that my consent is not a prerequisite for buying a property. I may revoke my consent at any time by contacting optout@55places.com. Message/data rates may apply. I also agree to 55places.com’s Privacy Policy and Terms of Use.

The Best Places to Snowbird in 2021

We’ve gathered 25 of the best places for snowbirds, including cities in Florida, Arizona, California, Texas, South Carolina, and Nevada. For each entry, we’ve also provided a list of recommended 55+ communities in the area. If you’re ready to find your own winter retreat this season, here are some of the best places to consider.

About 55places

We’re changing the way people 55 and older are searching for their perfect next place. With a national network of hand-selected real estate experts, plus comprehensive information, unbiased content, and on-the-go insight about thousands of communities across the country, we’re a trusted resource paving the way from here to home. Whether you’re interested in a low-maintenance single-level residence, an active lifestyle or age-qualified community, an intimate enclave, or anything in between, we can help you make your next move the best one yet.

Scroll to Top