Is State tax still counted as a deduction from Federal Income Tax?
Yes, but it is limited to $10K per year for those who itemize. State income tax maxes out at 12.3%. Sales tax in many counties is now at 10.25% (some higher, a few lower). Property taxes are moderate from a rate standpoint (about 1.25%), but they are based on the sales price of the property and CA housing prices are extremely high. As an example, average selling price in my ZIP code is about $1.4mil. That buys about 2300 square feet on a small lot. And your property taxes the first year would be $17,500, far in excess of the federal deduction limit, even before you factor in the state income tax and the sales tax. Gas taxes are the highest in the country. Auto and boat registrations (a value-based tax on personal property) are among the highest in the country, and were increased by the legislature by $5 billion a few years ago. In my city, we pay local taxes on our utilities (telephone, cell phone, cable TV, gas, electricity, water, sewer), on top of the various state and other taxes and assessment on these services. As Everett Dirksen once said, "A billion here, a billion there, pretty soon you're talking real money." Other than weather, topography, and natural resources, California sucks.
