Taxes in Palm Springs
California levies a real, current top marginal state income tax of 13.3% -- the highest of any US state, including a 1% Mental Health Services Act surcharge on income over $1M -- atop an underlying nine-bracket structure running 1%-12.3%, applying in full to Palm Springs' real, substantial population of higher-income retirees and second-home owners.
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Learn moreCalifornia's Real, Highest-in-the-Nation Top Marginal Income Tax
California's top marginal state income tax rate is 13.3% for 2026 -- the highest of any US state -- comprising a nine-bracket structure running 1%-12.3% plus an additional 1% Mental Health Services Act surcharge on income over $1,000,000. This is a real, meaningful cost that a mover comparing Palm Springs against a lower- or no-income-tax retirement destination should budget for directly, not assume away.
Property Tax Runs Through Prop 13, at a Real, Riverside County-Specific Rate
As detailed in full on the property-taxes topic page, California's Proposition 13 caps assessed-value growth at roughly 2%/year until resale, and Riverside County's effective rate runs approximately 0.82% -- above California's statewide average but slightly below the national average.
Most Retirement Income Is Taxable Under California's Real Income Tax
Unlike a no-income-tax state, California's progressive income tax generally applies to pension income, retirement account withdrawals, and other taxable retirement income for California residents -- a real, meaningful factor for Palm Springs' substantial retiree population specifically. This pass did not exhaustively re-verify California's Social Security income exclusion mechanics; confirm current California Franchise Tax Board guidance directly for a specific retirement-income situation.
No Special State-Level Capital Gains Treatment
California taxes capital gains as ordinary income under its progressive income-tax structure (up to the same 13.3% top marginal rate), rather than through a separate, lower capital-gains rate -- a genuinely significant consideration for anyone selling a prior home or investment property to fund a Palm Springs relocation or second-home purchase.
Property Taxes: A Pointer to Full Detail
Riverside County property taxes and Prop 13's real, disclosed mechanics are covered in full on the property-taxes topic page rather than repeated here.
Key takeaways
- California levies a real, current 13.3% top marginal income tax -- the highest of any US state, including a 1% surcharge on income over $1M -- atop an underlying 1%-12.3% bracket structure.
- Property tax runs through Prop 13's assessed-value cap, with Riverside County's effective rate at approximately 0.82% -- above the state average but slightly below the national average.
- Most retirement income (pensions, retirement-account withdrawals) is taxable under California's real income tax, a genuinely important factor for Palm Springs' substantial retiree population.
- California taxes capital gains as ordinary income (up to the same 13.3% top rate) rather than a separate, lower capital-gains rate -- relevant for anyone funding a move via a prior-property sale.
- Full property-tax mechanics (Prop 13, Riverside County rates) are covered on the property-taxes topic page.
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