Details of Public Law 119-21, section 70101 , One Big Beautiful Bill Act

This provision makes permanent the tax rate structure established under the Tax Cuts and Jobs Act (Public Law 115-97, section 11001) that was set to expire on December 31, 2025. For taxable year 2025, the rates are as follows:

10% for incomes of single individuals with incomes of $11,925 or less ($23,850 for married couples filing jointly)

12% for incomes over $11,925 ($23,850 for married couples filing jointly)

22% for incomes over $48,475 ($96,950 for married couples filing jointly)

24% for incomes over $103,350 ($206,700 for married couples filing jointly)

32% for incomes over $197,300 ($394,600 for married couples filing jointly)

35% for incomes over $250,525 ($501,050 for married couples filing jointly

37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly).

The 10 percent and 12 percent tax rate brackets would be indexed for inflation using the 2016 Chained Consumer Price Index for All Urban Consumers (C–CPI–U) beginning after December 31, 2025. The remaining tax brackets would use the 2017 C-CPI-U.

The provision also makes the capital gains and losses breakpoints permanent. Therefore, in the case of an individual (including an estate or trust) with adjusted net capital gain, to the extent the gain would not result in taxable income exceeding the 15 percent breakpoint, such gain is not taxed. Any adjusted net capital gain which would result in taxable income exceeding the 15 percent breakpoint but not exceeding the 20 percent breakpoint is taxed at 15 percent. The remaining adjusted net capital gain is taxed at 20 percent.

California does not conform, under PITL, to federal individual income tax rates, and instead has its own individual income tax rates that range from 1 percent to 12.3 percent. In addition, there is an additional tax of 1 percent on the portion of a taxpayer’s taxable income that exceeds $1,000,000. Thus, the maximum personal income tax rate is 13.3 percent.

California conforms, under the PITL and the CTL, to the federal rules for computing capital gains and losses, as of the specified date of January 1, 2025, with modifications. However, California does not provide special tax rates for net capital gain; instead, such gains are taxed at the same rates as ordinary income.