2012 Impact of California’s Prop 30
The people of California have spoken and Proposition 30 passed by a fair margin, roughly 54% to 46%. The question now is, “what does this mean for me?” In summary, Prop 30 means tax increases for all California taxpayers making over $250,000 per year (Single and Married Filing Separate filers) or $500,000 per year (Married Filing Joint and Head of Household filers.)
For Single and Married Filing Separate filers the new rates will be:
- 10.3% for taxable income between $250,001 and $300,000
- 11.3% for taxable income between $300,001 and $500,000
- 12.3% for taxable income above $500,000
For Married Filing Joint and Head of Household filers the new rates will be:
- 10.3% for taxable income between $500,001 and $600,000
- 11.3% for taxable income between $600,001 and $1,000,000
- 12.3% for taxable income above $1,000,000
In addition, the California mental health tax 1% surcharge on income over $1,000,000 remains in effect, so the top rate rises to 13.3% for these high earners.
These tax increases are retroactive to January 1, 2012 so planning now is essential to brace for higher balances due in April. With this new initiative passing combined with looming federal tax increases, planning this November and December is more important than ever! Contact your LMGW tax advisor right away to schedule an appointment.
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