California stock-comp tax reference
Top marginal rate, supplemental withholding, AMT status, and capital-gains treatment for RSU, ESPP, and ISO income earned by California residents.
Tax year 2026 · Last updated May 10, 2026
Top marginal income tax rate
12.3%
Supplemental withholding rate
10.23%
State personal AMT (impacts ISO)
Yes
LTCG treatment
Taxed as ordinary income
How it works
Note: California has a personal AMT (Schedule P (540), ~7%) that adds onto federal AMT for ISO exercises. A 1% Mental Health Services Tax surcharge applies to taxable income above $1M. Stock-option / RSU supplemental withholding is 10.23% (FTB Pub DE 44).
RSU vests
RSU vests are W-2 supplemental wages in California, withheld at the state supplemental rate (10.23%). Reconciled at filing against your actual marginal rate — same shortfall mechanics as federal.
ESPP qualifying dispositions
California taxes both the ordinary-income piece (the §423(c) discount) and the long-term capital gain at ordinary rates. Federal qualifying-disposition rules still split the gain into ordinary income and LTCG; state treatment is layered on top.
ISO exercises
California imposes a state-level AMT that can apply to ISO bargain element on top of federal AMT. Plan for additional state AMT in addition to the federal calculation.
Frequently asked questions
Does California have a state income tax on RSU vests?
Yes. California's top marginal rate is 12.3%. RSU vests are W-2 wages and follow normal state withholding + reconciliation.
What supplemental withholding rate does California use for RSUs and bonuses?
California uses a published supplemental rate of 10.23%.
Does California have a state AMT for ISO exercises?
Yes — California retains a personal AMT that can layer on top of federal AMT for ISO exercises. Confirm current-year mechanics with the California Franchise Tax Board.
How does California tax long-term capital gains?
California taxes long-term capital gains at the same rates as ordinary income — no preferential LTCG rate.
Where is this information sourced?
Top marginal rates are from the Tax Foundation 2025 state individual income tax brackets summary. State supplemental rates are from the published guidance of each state's revenue department (linked above). Personal AMT status reflects 2025 legislation. Always confirm current-year rules with the California Franchise Tax Board before making decisions.
Is this tax advice?
No. This is a planning reference — state tax law changes frequently and varies by individual situation. Talk to a CPA licensed in California for advice on a real transaction.