Income Tax

• California requires an individual to file a state income tax return if his gross income exceeds a certain amount. For individuals over 65 or those with dependents, this income limit is higher. California doesn't impose tax on income individuals receive from Social Security, including disability insurance, retirement benefits and Supplemental Security Income. Unemployment insurance benefits and State Disability Insurance benefits are also exempt from taxation in California. However, individuals must pay income tax on other disability or retirement pensions.
  
  

Sales Tax

• In California, most sales of tangible personal property are subject to sales tax. Individuals who pay for labor or services that resulted in the creation of tangible property must also pay sales tax. However, sales of food products for human consumption, sales of prescription medication and sales made to the U.S. government are typically exempt from sales tax. Sellers are responsible for paying sales tax, but California permits them to collect the amount from their customers.
  
  

Use Tax

• California typically imposes use tax on sales of items from other states intended for use in California. Such retailers are responsible for remitting this tax to California, but they may charge the amount to consumers at the time of the sale. At the time of publication, the sales and use tax rate in California is 8.25 percent. However, some districts may impose higher rates.
  
  

Gifts and Inheritance

• In California, individuals don't owe tax on gifts they give or receive regardless of the value. California doesn't impose inheritance tax, either. However, California does impose a death tax on property that qualifies for the federal credit for state death taxes. California also imposes generation-skipping transfer tax on property that passes to lineal descendants who aren't children of the deceased person.