California retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 13.3%California has nine brackets from 1% to 12.3%, plus a 1% mental health surcharge on income over $1 million (13.3% top rate). |
|---|---|
| Social Security | Not taxedCalifornia does not tax Social Security benefits. |
| Pensions | TaxedPensions are taxed as regular income. |
| 401(k) and IRA withdrawals | TaxedIRA and 401(k) withdrawals are taxed as regular income. |
| Government pensions | TaxedGovernment pensions are taxed as regular income. |
| Military retirement pay | Partly taxedFor tax years 2025 through 2029, up to $20,000 of military retirement pay or SBP annuity income can be excluded if AGI is at or below $125,000 (single) or $250,000 (joint). |
| Estate tax | No |
| Inheritance tax | No |
| Property tax help for seniors | Homeowners 62+ with at least 40% equity and income under $55,181 can postpone property taxes on their home. |
| Sales tax | Base rate 7.25%; average combined rate about 8.99%. |
Recent changes and good to know
- The 2025-26 budget (signed 2025-06-27) created California's first military retirement exclusion, for tax years 2025-2029.
- Seniors 65+ may claim a senior head of household credit (up to $1,860 if household income is below $98,652).
How to lower your retirement taxes in California
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in California too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does California tax retirement income?
Yes: California taxes pensions and IRA/401(k) withdrawals in full, but not Social Security, and now partly excludes military retirement pay.
Does California tax Social Security?
California does not tax Social Security benefits.
Does California tax pensions?
Pensions are taxed as regular income.
Does California tax 401(k) and IRA withdrawals?
IRA and 401(k) withdrawals are taxed as regular income.
Does California tax military retirement pay?
For tax years 2025 through 2029, up to $20,000 of military retirement pay or SBP annuity income can be excluded if AGI is at or below $125,000 (single) or $250,000 (joint).
Sources (last verified 2026)
- Military | FTB.ca.gov — California Franchise Tax Board (2026-09-24)
- The 2025-26 Budget: Partial Income Tax Exclusion for Military Retirement Income — California Legislative Analyst's Office (2025)
- California State Taxes 2026 — AARP (2026)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.