Do California's Top Tax Brackets Expire After 2030?

This matters most to a California seller who is paid over time. Gain from an installment sale is taxed in the year each payment arrives, so a schedule that runs past 2030 has payments that land on the far side of a date the voters are about to decide. This page is part of our beyond the tax bill series.

Where do the top brackets come from?

California's regular income tax schedule tops out at 9.3%. The three brackets above it were added by Proposition 30 in 2012 as a temporary tax and extended by Proposition 55 in 2016. The constitutional text is plain about the end date. The extra rates apply "for any taxable year beginning on or after January 1, 2012, and before January 1, 2031" (Cal. Const. art. XIII §36(f)(2)). Tax year 2030 is the last one covered.

The 2025 thresholds from the FTB 2025 tax rate schedules:

Is the 1% millionaire tax also temporary?

No. The Mental Health Services Tax from Proposition 63 is in R&TC §17043. It applies "for each taxable year beginning on or after January 1, 2005" at "1 percent on that portion of a taxpayer's taxable income in excess of one million dollars." There is no sunset. The $1 million line is not doubled for joint filers and is not indexed for inflation.

So the 13.3% top rate people quote is really two pieces: 12.3% that expires after 2030 under current law, and 1% that does not. If the Prop. 55 brackets lapsed, the top combined rate on income over $1 million would be 10.3% (9.3% plus 1%).

What is Proposition 3 on the November 2026 ballot?

The Secretary of State's November 3, 2026 voter guide lists it as "Proposition 3: Provides Permanent Funding for Schools and Health Care by Extending Existing Tax on High Incomes. Initiative Constitutional Amendment." The guide says it "Makes permanent existing voter-approved tax rates for individuals earning over $371,000 (adjusted annually for inflation)."

The Legislative Analyst's Office estimates it "Maintains $5 billion to $15 billion of annual state income tax revenue" (LAO analysis). Per the guide, a NO vote means the rates "would expire in 2031."

We do not predict elections. The 2031 sunset is current law today, and one vote in five weeks could remove it. Anything you read about "rates dropping in 2031" is a what-if that depends on Prop. 3 failing.

Prop. 40, briefly. Also on the ballot is Prop. 40, a one-time 5% tax on the net worth of certain residents with assets over $1 billion. Per the LAO, "Real estate, pensions, and retirement accounts generally would be excluded." It is a wealth tax, not an income tax, and it does not change the rate on a property sale or on installment payments.

Why would a sunset matter for installment payments?

On an installment sale, California taxes the gain in the year each payment is received (the examples in FTB Publication 1100 treat each year's payments that way), at that year's rates. Payments you receive in 2031 or later would be taxed under whatever schedule applies then.

That includes many sellers who have left the state. The FTB's Publication 1100 explains that "California taxes real property based upon where the property is located." In its Example 7, a California resident sells California real property on an installment sale, moves to Washington, and receives a payment the next year. The FTB's answer: "The capital gain income is taxable by California because the property you sold was located in California." The interest on that payment is not, because the seller was a nonresident when it was received. And a nonresident's California tax is figured at the rate that applies to total income from all sources, then prorated (Pub. 1100 walks through this), so the top brackets can still reach a large payment. Moving away does not take California real estate gain out of the state's reach. See avoiding California capital gains tax by moving for the rest of that picture.

What is the what-if in dollars?

These are illustrative engine runs, both California residents throughout, sale in 2026, paid over 10 years (2026 to 2035) through a structured installment sale at a 5% payout rate. Selling costs are 5.5% of price. The figures are the extra California tax the sale adds each year (gain plus interest on the payments), compared with the same year with no sale. "Today's rates" keeps the Prop. 55 brackets in every year. "If they revert" caps every bracket at 9.3% starting in 2031. The 1% over $1 million stays in both.

Case 1: married filing jointly, $12 million sale, $2 million basis, $150,000 other income.

Case 2: single, $5 million sale, $1 million basis, $100,000 other income. California tax on the 2031 to 2035 payments: $237,958 at today's rates vs $221,710 if the brackets revert, a difference of $16,248.

A few things to take from this:

• The what-if is real money, but it is not the main event. The same MFJ seller taking all cash in 2026 would owe about $1,206,470 of California tax that one year (single case: about $473,595). The sunset question moves the late years by about 8% for the joint filer, not the whole bill.
• It only exists if Prop. 3 fails. If it passes, the "if they revert" column disappears and today's rates are the answer.
• Only the three brackets change in this what-if. Everything else, including the 1% over $1 million and the payment schedule, is held the same in both columns.
• Residents also pay California tax on the interest. In these cases the interest is part of each year's California income. A seller who moves out before receiving later payments would owe California tax on the gain, not the interest (Pub. 1100).

Should I time a sale around the election?

We would not build a plan on a ballot outcome. The vote is on November 3, 2026, and the numbers above show the stakes are a slice of the late-year state tax, not the deal. A spread still has to stand on its own merits: federal brackets, the 3.8% net investment income tax, and the costs we cover elsewhere in this series, such as IRMAA after a property sale and the SALT cap phase-down. Spreading lowers the headline tax bill, but it can stretch some of those costs over more years, so size each year's income against the lines that matter to you.

Treat the sunset as one scenario to put in front of your CPA: "If Prop. 3 fails, what do my 2031 and later payments look like, and does it change anything about the schedule?"

What to know about a structured installment sale: the payments are locked in once set; they depend on the assignment company and the life insurer behind it; there is no published IRS ruling on this specific assignment structure, so have your CPA review it; and a commission is built into the pricing. See what a structured installment sale is and IRC §453.

How does the calculator handle this?

The calculator keeps today's California rates in every year. It does not assume the sunset and does not assume Prop. 3 passes. When a California schedule has gain or interest landing in 2031 or later, it shows a note citing Cal. Const. art. XIII §36(f)(2) and the Prop. 3 ballot measure, and its "Beyond the tax bill" slide shows the other costs a sale can trigger. For state-by-state rates, see capital gains tax by state and the California capital gains tax calculator.

Frequently asked

Q: When do California's top tax brackets expire? A: Under current law, the 10.3%, 11.3% and 12.3% brackets apply to tax years beginning before January 1, 2031, so 2030 is the last covered year. Proposition 3 on the November 3, 2026 ballot would make them permanent.

Q: Does the 1% tax on income over $1 million expire too? A: No. The Mental Health Services Tax under R&TC §17043 has no end date, and its $1 million threshold is the same for joint and single filers.

Q: If the brackets expire, what is California's top rate? A: The regular schedule tops out at 9.3%. With the 1% on taxable income over $1 million, the combined top rate would be 10.3%.

Q: Does California tax installment payments after I move away? A: Gain from California real property, yes. FTB Publication 1100 says California taxes real property based on where it is located, so the gain in each payment stays taxable. Interest received while you are a nonresident is not.

Q: Should I wait for the election before closing? A: We would not make the vote the reason for any date. Run the scenario with your CPA and choose the schedule on its own merits.

What should you read or run next?

• Beyond the tax bill: the costs a sale triggers
• The calculator, with its "Beyond the tax bill" slide
• California capital gains tax calculator
• Structured installment sales at high incomes
• AMT on a property sale
• Structured installment sale guide

Illustrative estimates using 2026 law and 2025 California schedules. Not tax, legal or accounting advice. Figures change each year and ballot outcomes can change the law; have your CPA confirm with your own return.

Who wrote this?