California has just effectively raised your income taxes because of deflation in the economy. They’ve not only increased the tax rates by changing the tax table brackets, but they’ve also adjusted exemptions.
They can make these kinds of inflation-related (or deflation) adjustments to the tax rate tables without having to go before the legislature.
If you have made the same salary this year as last year, first celebrate, and then get ready to pay more California income tax.
This is the same sort of let’s-beat-a-dead- horse- while- it’s down thinking that has lead the IRS to come after wineries for LIFO adjustments at a time when they are already struggling.
According to the state’s official announcement, we’ll be losing in the following areas when we go to file our 2009 California income tax return :
The standard deduction will decrease
The personal exemption credit amount for single, separate, and head of household filers will decrease
The dependent exemption credit goes down to $98 this year, from $309 last year
Other tax credits affected by indexing include the Joint Custody Head of Household Credit, Dependent Parent Credit, and Qualified Senior Head of Household Credit
Here is the official announcement from the state of California about the change: http://www.ftb.ca.gov/aboutftb/press/2009/release_46.shtml 
And don’t get me started about California’s new Use Tax return filing requirements.