How California taxes retirement income

Some 2026 figures pending confirmation Tax year 2026 · research last updated October 2, 2026

California doesn't tax Social Security benefits.
California has no general exclusion for pension or IRA income; it's taxed like other income (credits and age-based amounts are below).
Rates for 2026: 1% to 12.3%, graduated.

At a glance

Income tax	Yes
Rates (2026)	1% to 12.3%, graduated
Starts from	Federal adjusted gross income (AGI)
Standard deduction	$5,900 single, $11,800 married filing jointly
Personal credit	$158 per person
Age 65 and older	$158 extra credit per person
Social Security	Not taxed
Retirement income exclusions	None
Roth conversions	Taxable
Capital gains	Taxed like other income
Local income tax	None

Tax rates

Brackets apply to California taxable income. Other filing statuses are in the rules reference.

Rate	Single: taxable income	Married filing jointly: taxable income
1%	$0 to $11,456	$0 to $22,912
2%	$11,456 to $27,157	$22,912 to $54,314
4%	$27,157 to $42,861	$54,314 to $85,722
6%	$42,861 to $59,498	$85,722 to $118,996
8%	$59,498 to $75,197	$118,996 to $150,394
9.3%	$75,197 to $384,109	$150,394 to $768,218
10.3%	$384,109 to $460,927	$768,218 to $921,854
11.3%	$460,927 to $768,213	$921,854 to $1,536,426
12.3%	$768,213 and up	$1,536,426 and up

California doesn't tax Social Security benefits.

Pensions, IRAs and 401(k)s

California has no general exclusion for pension, IRA or 401(k) income in 2026. It's taxed at the rates above, after any deductions and credits.

Roth conversions

A Roth conversion counts as taxable income for California.

Capital gains

Taxed like other income, at the rates above.

Credits and relief for older residents

Senior exemption credit. Additional exemption credit ($153 for 2025; $158 for 2026, see indexing2026) for each taxpayer/spouse 65 or older by December 31 (a Jan 1 birthday counts as 65 on Dec 31); not allowed if someone can claim you as a dependent. Modeled in age65.extraCredit.
Exemption credit phase-out. If federal AGI exceeds $252,203 (single/MFS), $504,411 (joint/QSS) or $378,310 (HoH) [2025; 2026: $260,778 / $521,561 / $391,173, see indexing2026], each personal, blind and senior credit is reduced by $6 for every $2,500 ($1,250 MFS) or fraction of AGI over the threshold, not below zero (dependent credits reduced the same way separately).
Nonrefundable renter's credit. $60 single/MFS or $120 joint/HoH/QSS if renting a California principal residence at least half the year and CA AGI <= $53,994 (single/MFS) or $107,988 (others) [2025].
Senior head of household credit. 2% of taxable income up to $1,860 [2025] for a 65+ taxpayer who qualified as HoH in one of the two prior years and whose qualifying individual died; income-limited. Rare.

More detail from our research notes

California taxes all pension, annuity, IRA and 401(k) income (including Roth conversions) fully; there is no retirement income exclusion and no age-based deduction beyond the senior exemption credit. Social Security and Tier 1/Tier 2 railroad retirement are fully excluded (subtracted on Schedule CA). Capital gains are ordinary income. California does not conform to the federal $6,000 senior deduction, the federal age-65 additional standard deduction, or the federal standard deduction amounts. Brackets, standard deduction, exemption credits and AGI thresholds are indexed annually by the California CPI (June-to-June); 2026 figures are normally released by FTB late in the year, so the numbers above are the 2025 values (2025 Form 540 booklet) indexed by the statutory 2026 factor 1.034 (see indexing2026); FTB's own 2026 Form 540-ES still uses the 2025 amounts. Tax for taxable income <= $100,000 comes from the FTB tax table; above that, the rate schedules. Behavioral Health Services Tax (formerly Mental Health Services Tax): an extra 1% on taxable income over $1,000,000 for every filing status (not doubled for joint) — not included in the brackets above; add it separately. Itemized deductions (California rules: no deduction for state income tax; SALT not capped the federal way) are reduced for federal AGI above the same thresholds as the credit phase-out (Schedule CA). Military retirement: a limited exclusion exists for certain lower-income military retirees starting 2025 (military-only; not modeled). Early-distribution penalty: CA imposes 2.5% on early IRA/plan distributions (6% for some) via FTB 3805P.

Pending confirmation

These points were still being confirmed against California's published 2026 forms when this page was built. Most are waiting on forms the state publishes around the turn of the year.

4 items

Brackets, standard deduction ($5,900/$11,800), exemption credits ($158/$491) and AGI thresholds are the 2025 values x 1.034 (R&TC 17041(h) with DIR's June 2026 California CPI; see indexing2026); FTB has not published its 2026 indexed amounts as of 2026-10-02 (2026 Form 540-ES still shows $5,706/$11,412). Replace with FTB's figures when released: FTB announced the 2025 amounts in the October 2025 Tax News ('2025 Indexing', CCPI June-to-June) with full schedules 'in late December', so expect https://www.ftb.ca.gov/about-ftb/newsroom/tax-news/2026/10.html (mid/late October 2026; not posted as of 2026-10-02) and the 2026 Form 540 booklet (late December). Renter's credit limits are still 2025 values.
California early-distribution additional tax rate (2.5%, FTB 3805P) not re-confirmed this pass (leginfo R&TC 17085 unreachable 2026-10-02). Renter's credit $60 single/MFS, $120 joint/HOH/QSS confirmed in the 2025 Form 540 booklet line 46 instructions ; its AGI limits are indexed (2025: $53,994 / $107,988).
Military retirement exclusion details (2025-2029) not researched (military-only).
No 2026-enacted change to retiree taxation found (SB 1407 military exclusion increase held in Assembly Appropriations Aug 13 2026; secondary). Proposition 3 (Nov 3 2026 ballot) would make the Prop 30/55 top rates permanent instead of ending after TY2030 ; the 2031 scheduled change depends on its outcome.

Sources

Every figure comes from these documents, mostly the state's own forms, instructions and statutes.

2025 Form 540 booklet: tax rate schedules X/Y/Z, standard deduction, senior exemption (Dec 31 / Jan 1 birthday rule), exemption credit AGI limitation worksheet, renter's credit limits, Behavioral Health Services Tax; Itemized deductions (group-d, 2026-10-02): Schedule CA (540) Part II and instructions pp.66-68 (no state income tax, no SALT cap, 50%-of-AGI charity limit, line 29 worksheet 6% / 80% over the creditPhaseStart thresholds). Local copyhttps://www.ftb.ca.gov/forms/2025/2025-540-booklet.html
2025 Form 540: exemption credit amounts ($153 personal/blind/senior, $475 dependent)https://www.ftb.ca.gov/forms/2025/2025-540.pdf
DIR California Consumer Price Index 1955-2026 (June 2025 353.044, June 2026 364.969): the R&TC 17041(h) inflation rate for 2026, 3.4%https://www.dir.ca.gov/OPRL/CPI/EntireCCPI.PDF
R&TC 17041(h): inflation adjustment factor = 100% + DIR June-to-June California CPI change; products rounded to the nearest $1https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=17041
2026 Form 540-ES instructions (still uses 2025 standard deduction; confirms 2026 indexed values not yet published)https://www.ftb.ca.gov/forms/2026/2026-540-es-instructions.html
LAO analysis of Proposition 3 (Nov 3, 2026 ballot): permanent extension of the Prop 30/55 rates otherwise expiring in 2031https://lao.ca.gov/ballot/2026/prop3-110326.pdf

Taxtirement's California calculation is also checked against a second, independent implementation on 1,000 random households. How we check our numbers.

See your own years. Taxtirement applies these California rules, and the federal and Medicare rules, to your household for every year of retirement, and shows the calculation behind each number. Coming November 2026 for iPhone, iPad and Mac.

This page summarizes California's 2026 rules as Taxtirement applies them, for education and planning. It isn't tax advice, and it doesn't cover every situation (for example part-year residents, businesses or military-only provisions). Rules change; check the state's current instructions, or a tax professional, before you act. Spotted something wrong? Tell us.