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Prop 30: Retroactive Tax Increases Approved by Voters

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Gumbiner Savett Inc.Voters have approved Proposition 30, which includes a retroactive tax increase for high-income individuals.  Retroactive to January 1, 2012, this proposition creates new high-income tax brackets for California taxpayers with taxable incomes exceeding $250,000. 

 Previously, California’s maximum tax rate was 9.3%.  The new higher brackets are as follows –

 Single or Married Filing Seperate 

  • 10.3%  for income $250,001 to $300,000
  • 11.3%  for income $300,001 to $500,000
  • 12.3%  for income $500,001 and over

 Married  Filing Jointly

  • 10.3% for income $500,001 to $600,000
  • 11.3% for income $600,001 to $1,000,000
  • 12.3% for income $1,000,000 and over

Head of Household 

  • 10.3% for income $340,001 to $408,000
  • 11.3% for income $408,001 to $680,000
  • 12.3% for income $680,000 and over

** Remember that California also imposes a 1% mental health surcharge on all income in excess of $1,000,000.  That remains unchanged and would be in addition to the rates mentioned above.

Since this proposition was retroactive to January 1, 2012, these rates will be effective for your 2012 tax returns.  The rates are scheduled to remain in effect for seven years.

Proposition 30 also increases state sales taxes by .25% for four years, beginning January 1, 2013. 

By Gil Greene, CPA and Lori Shrout, EA – Gumbiner Savett Inc.

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