One reason why the issue of California residency is such an important question in the process of preparing California income tax returns is: The tax rates for residents are different than for non-residents California residents have to pay Calfornia income tax on alf their Worldwide income, whereas Colifornis non-residents or-part year residents pary only CA fax on California source income. Nevado does not have a srate income tax Calfornies income tax ratet max out at 5.5 percens