How California taxes retirement income
California does not tax Social Security benefits. Pensions and 401(k)/IRA withdrawals are taxed as ordinary income. California does not tax Social Security benefits, but pensions and 401(k)/IRA withdrawals are taxed as ordinary income, with no state exclusion. California also adds its own 2.5% tax on early (pre-59.5) withdrawals on top of income tax.
Retirement income tax in California, at a glance
| Income type | Taxed by California? |
|---|---|
| Social Security | No |
| Pensions | Yes |
| 401(k) / IRA withdrawals | Yes |
| Estate / inheritance tax | None |
| Avg. property tax rate | 0.71% of home value |
Does California tax Social Security benefits?
No. California does not tax Social Security benefits.
Does California tax pensions and 401(k) or IRA withdrawals?
Yes. California taxes pension income and 401(k)/IRA withdrawals as ordinary income. California does not tax Social Security benefits, but pensions and 401(k)/IRA withdrawals are taxed as ordinary income, with no state exclusion. California also adds its own 2.5% tax on early (pre-59.5) withdrawals on top of income tax.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- California taxation of retirement income (Social Security, pensions, 401(k)/IRA): California Department of Revenue / Taxation.