Federal income taxes top out at 37% but state taxes add on to that. Most states have a top bracket over 3% to get it over the 40% threshold to break even. Calif

Federal income taxes top out at 37% but state taxes add on to that. Most states have a top bracket over 3% to get it over the 40% threshold to break even. California has a top bracket of 13.3% for a total of 50.3%, so that example would be a net profit of a million dollars.