Californian’s already pay high taxes, but a tax bill, AB 1253 (Santiago), would impose even higher taxes, and retroactively to January 1, 2020. If passed, high income Californians would pay another 1% on income over $1,181,484, 3% on income over $2,362,968, and 3.5% on income over $5,907,420.
These dollar thresholds look odd, but are $1M, $2M and $5M plus inflation adjustments. They would hit only very high income Californians, hiking California’s tax rate on income over $1 million from 13.3% to 14.3%. California’s highest rate would be a whopping 16.8%. You can read Assembly Bill 1253 for yourself.
While Morgan & Associates main business is located in Michigan, we do service clients all over the country. This situation will be an unprecedented change to income taxes in states if California can pass a bill that retroactively changes the tax rates. This means that halfway into a tax year a state can change the rate of taxes we paid to help balance budgets or fund projects.
While this is only a proposed bill the implications of passing a bill like this could open up other states following suit. We will continue to monitor this situation and update our clients accordingly. If anyone has any questions on this feel free to reach out to [email protected] to discuss.