Thank you for the examples. I checked my tax settings and they pretty much are the same as in your examples. There is one difference, though. When I set the tax rate for both states, I entered a percentage (e.g. 7.5 for California) and left the field right below blank. After I saved the settings, the blank field was populated with 0.0000 and this is what I'm showing now:
"Apply this tax only if, taxed amount (product, shipping, subtotal, etc.) is ... 0.00000". In the shipping/tax estimator, it's not showing any tax estimate for either state. Then I changed the above expression to "Apply this tax only if, taxed amount (product, shipping, subtotal, etc.) is > (greater than) 1.00". Tried tax estimator again, still having the same problem. It's not showing the sales tax for either state.