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State's Income Tax Rates Drop for 2003 Due to Indexing

California taxpayers will pay slightly less in income taxes next year due to indexed tax rates for 2003, announced the Franchise Tax Board (FTB).

“Our tax system is based on fairness and indexing the state's tax rates ensures that people do not pay more in taxes year to year simply because of inflation,” said State Controller and FTB Chair Steve Westly.

The tax rates have been indexed by 2.2 percent for the 2003 tax year, which means that the average family will pay less in state income taxes if their income was unchanged from last year. Indexing takes the inflation rate into account and adjusts tax brackets, filing requirement thresholds, the standard deduction, and certain credits. The FTB computes the indexed values using the inflation rate as measured by the California Consumer Price Index for all urban consumers from July 1, 2002 to June 30, 2003. Last year's inflation rate measured 1.5 percent.

The FTB designs the minimum filing requirement thresholds to ensure that most people who will not owe taxes are not required to file a tax return. The FTB adjusts these tables each year to include the added senior exemption and the dependent exemption credits. The tax threshold, the amount of income reached where a tax liability is incurred, has risen to $10,177 of adjusted gross income for single and married filing separate taxpayers and $20,302 for married, surviving spouse, and head of household taxpayers.

The standard deduction will increase for single or married filing separate taxpayers from $3,004 to $3,070. For married, qualifying widow(er), or head of household taxpayers, the standard deduction increases from $6,008 to $6,140. The personal exemption credit increases for single, married filing separate, or head of household taxpayers from $80 to $82 and for married or surviving spouses from $160 to $164. The dependent exemption credit changes from $251 to $257 for each dependent.

Other tax credits affected by indexing include the Joint Custody Head of Household Credit, Dependent Parent Credit, Qualified Senior Head of Household Credit, and the Renter's Tax Credit.

Editor's Note: See the attached chart for tax rates and filing requirement amounts.

2003 California Tax Rate Schedules

Schedule X
Single or Married Filing Separate Taxpayers
If the taxable income is
Computed tax is
over
but not over
of amount over
$0
$5,962
$0.00
plus
1.0%
$0
$5,962
$14,133
$59.62
plus
2.0%
$5,962
$14,133
$22,306
$223.04
plus
4.0%
$14,133
$22,306
$30,965
$549.96
plus
6.0%
$22,306
$30,965
$39,133
$1,069.50
plus
8.0%
$30,965
$39,133
and over
$1,722.94
plus
9.3%
$39,133
Schedule Y
Married Filing Joint or Qualifying Widow(er) Taxpayers
If the taxable income is
Computed tax is
over
but not over
of amount over
$0 $11,924 $0.00
plus
1.0%
$0
$11,924 $28,266 $119.24
plus
2.0%
$11,924
$28,266 $44,612 $446.08
plus
4.0%
$28,266
$44,612 $61,930 $1,099.82
plus
6.0%
$44,612
$61,930 $78,266 $2,139.00
plus
8.0%
$61,930
$78,266 and over $3,445.88
plus
9.3%
$78,266
Schedule Z
Head of Household Taxpayers
If the taxable income is
Computed tax is
over
but not over
of amount over
$0 $11,930 $0.00
plus
1.0%
$0
$11,930 $28,267 $119.30
plus
2.0%
$11,930
$28,267 $36,437 $446.04
plus
4.0%
$28,267
$36,437 $45,096 $772.84
plus
6.0%
$36,437
$45,096 $53,267 $1,292.38
plus
8.0%
$45,096
$53,267 and over $1,946.06
plus
9.3%
$53,267

2003 Filing Requirement Amounts

Gross income more than:

Age on 12/31/03
No dependents
1 dependent
2 dependents
Single or
head of
household
Under 65
12,346
20,913
27,338
65 or older
16,446
22,871
28,011


Age on 12/31/03
No dependents
1 dependent
2 dependents
Married Under 65 (both spouses)
24,692
33,259
39,684
65 or older (one spouse)
28,792
35,217
40,357
65 or older (both spouses)
32,892
39,317
44,457


Age on 12/31/03
No dependents
1 dependent
2 dependents
Qualifying
widow(er)
Under 65
N/A
20,913
27,338
65 or older
N/A
22,871
28,011

Adjusted gross income more than:

Age on 12/31/03
No dependents
1 dependent
2 dependents
Single or
head of
household
Under 65
9,877
18,444
24,869
65 or older
13,977
20,402
25,542


Age on 12/31/03
No dependents
1 dependent
2 dependents
Married Under 65 (both spouses)
19,753
28,320
34,745
65 or older (one spouse)
23,853
30,278
35,418
65 or older (both spouses)
27,953
34,378
39,518


Age on 12/31/03
No dependents
1 dependent
2 dependents
Qualifying
widow(er)
Under 65
N/A
18,444
24,869
65 or older
N/A
20,402
25,542