Does California tax Social Security and retirement income?
By Nicolas Straut
Key takeaways
- California leaves Social Security off your state return, even the share your federal return taxes.1
- Pensions and IRA or 401(k) withdrawals count as California income at any age, so a required distribution meets the same graduated rates as a paycheck.
- A single retiree, 72, taking $48,000 from an IRA owes about $767 to California for 2026, after two $153 exemption credits.
In this article
- What California taxes once you retire
- Why turning 65 barely moves a California tax bill
- What a single retiree drawing $48,000 from an IRA pays California
- California vs the states Californians retire to
- Figures California has not published yet
- Time your IRA withdrawals around California brackets
- California retirement tax questions
Key takeaways
- California leaves Social Security off your state return, even the share your federal return taxes.1
- Pensions and IRA or 401(k) withdrawals count as California income at any age, so a required distribution meets the same graduated rates as a paycheck.
- A single retiree, 72, taking $48,000 from an IRA owes about $767 to California for 2026, after two $153 exemption credits.
No, California doesn't tax Social Security. It taxes almost everything else a retiree lives on, because the Franchise Tax Board follows the federal treatment of pensions, annuities and IRAs.
So the California question is a bracket question, not an exemption question. Your IRA withdrawals stack on top of any pension and run through the rates a worker pays.
What California taxes once you retire
| Income | In California | The rule |
|---|---|---|
| Social Security | Not taxed | California does not tax Social Security benefits, even the part your federal return taxes.1 |
| Pensions | Taxed | California taxes pensions and annuities the same way the federal return does, as ordinary income.1 |
| IRA and 401(k) withdrawals | Taxed | California taxes traditional IRA and 401(k) withdrawals as ordinary income. Only the part that came from nondeductible contributions comes back tax free.1 |
| Income tax rate | Graduated | 1% to 12.3% for 2025, plus a 1% Behavioral Health Services Tax on taxable income over $1,000,0002 |
Why turning 65 barely moves a California tax bill
Plenty of states exclude part of a pension from a set age. California's relief at 65 is a credit of $153 per person, which comes off the tax rather than the income.
No retirement income exclusion
California has no exclusion for retirement income at any age. What lowers the bill at 65 is the senior exemption credit, $153 per person for 2025, on top of the $153 personal exemption credit.3
A 2.5% tax on early withdrawals
California adds its own tax of 2.5% of an early distribution taken before age 59½, on top of the federal additional tax, unless an exception applies.1
Pensions after you move away
California does not tax retirement income received by a nonresident after December 31, 1995, so a pension you earned in California is not taxed by California once you live elsewhere.1
What a single retiree drawing $48,000 from an IRA pays California
Take a single retiree, 72, living on $26,000 of Social Security and $48,000 of traditional IRA withdrawals. California owes nothing on the benefits and $767 on the withdrawals.
| Step | Amount |
|---|---|
| Social Security | Not taxed |
| IRA withdrawals and pension | $48,000 |
| Standard deduction4 | −$5,706 |
| Taxable income | $42,294 |
| Tax before credits | $1,073 |
| Credits3 | −$306 |
| California tax owed | $767 |
Most of that bill comes from the 4% and 6% brackets, which start at $26,264 and $41,452 of taxable income for a single filer. A married couple gets brackets twice as wide, which is why our sample couple with more income pays only $138.
California vs the states Californians retire to
Arizona and Texas draw a lot of California retirees, and New York is the other high-tax benchmark. Our married sample couple pays $138 in California.
| State | State tax on the sample couple |
|---|---|
| California | $138 |
| Arizona | up to $1,395 |
| Texas | $0 |
| New York | $154 |
| Every state we cover | |
Figures California has not published yet
- California's 2026 brackets, standard deduction and exemption credits, which the FTB had not published when we read its pages.
Time your IRA withdrawals around California brackets
Spreading withdrawals evenly can keep more of them in the lowest brackets than taking a large sum in one year. The Tweed Retirement Withdrawal Plan models that with California tax included, and the free Tweed Retirement Calculator checks whether your savings last.
Required minimum distributions set a floor on what you withdraw each year once they start. The RMD table for 2026 shows that floor, and a Roth conversion in a low-income year can shrink it. California taxes the converted amount the same way it taxes a withdrawal.
Since California leaves your benefit alone, only federal tax applies to it whatever age you file, and the Tweed Social Security claiming plan compares filing ages for you and a spouse.
This year is free
Plan your IRA withdrawals with California tax included
California retirement tax questions
Does California tax Roth IRA withdrawals?
No, California does not tax a qualified Roth IRA withdrawal. The Franchise Tax Board treats IRAs the same way the federal return does, and a qualified Roth withdrawal is tax free there.
Does California tax railroad retirement benefits?
No, California does not tax Tier 1 railroad retirement benefits, which it lists alongside Social Security in its pension guide.
Does California tax a foreign pension or foreign social security?
Yes, California taxes social security paid by another country. Its pension guide treats foreign social security as annuity income, unlike U.S. Social Security.
Sources
- https://www.ftb.ca.gov/forms/2024/2024-1005-publication.pdf
- https://www.ftb.ca.gov/forms/2025/2025-540-tax-rate-schedules.pdf
- https://www.ftb.ca.gov/forms/2025/2025-540.pdf
- https://www.ftb.ca.gov/forms/2025/2025-540-instructions.html
This page covers California state income tax on retirement income for full-year residents in 2026. The households are illustrations, not your return.
Tweed provides educational information, not tax or financial advice. Nicolas Straut is a personal finance writer, not a financial advisor or tax preparer.
Personal finance writer, former Forbes contributor and This Week in Fintech writer. He isn't a financial advisor or a CPA.
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