State retirement taxes · 2026
Does California tax retirement income?
Short answer: Yes — everything except Social Security. California does not tax Social Security benefits. No retirement income exclusion beyond the new military one.
What’s taxed in California
2026 rules. AGI means the adjusted gross income on your federal return.
- Social SecurityNot taxed
- California does not tax Social Security benefits.
- PensionsTaxed
- Public and private pensions are fully taxable.
- IRA & 401(k) withdrawalsTaxed
- IRA, 401(k) and 403(b) withdrawals are fully taxable.
- Military retirement payPartly taxed
- For 2025–2029, up to $20,000 of military retirement pay (or Survivor Benefit Plan annuity) is excluded if AGI is $125,000 or less ($250,000 joint); the rest is taxed.
- Income tax rate12.3% top
- Nine brackets from 1% to 12.3% in 2026; the top bracket starts above $768,213 single and $1,536,426 married filing jointly.
Does California tax Social Security?
California does not tax Social Security benefits.
U.S. Social Security benefits and equivalent Tier 1 Railroad Retirement benefits are excluded from California taxable income, with no age or income test.
Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.
Are pensions taxed in California?
Public and private pensions are fully taxable.
Pensions are taxed as they appear in federal AGI. California has no age-based pension exclusion; the only carve-out is the new military retirement exclusion.
Public vs. private pensions: Treated the same: both fully taxable.
Are IRA and 401(k) withdrawals taxed in California?
IRA, 401(k) and 403(b) withdrawals are fully taxable.
California follows the federal treatment and has no retirement income exclusion. Early withdrawals can also owe a California additional tax.
Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.
Is military retirement pay taxed in California?
For 2025–2029, up to $20,000 of military retirement pay (or Survivor Benefit Plan annuity) is excluded if AGI is $125,000 or less ($250,000 joint); the rest is taxed.
What is California’s income tax rate?
9 brackets, topping out at 12.3%.
Nine brackets from 1% to 12.3% in 2026; the top bracket starts above $768,213 single and $1,536,426 married filing jointly. A separate 1% Behavioral Health Services Tax applies to taxable income over $1 million.
2026 brackets. Each rate applies to taxable income above the amount shown.
| Single | Married, joint | Rate |
|---|---|---|
| $0 | $0 | 1% |
| $11,456 | $22,912 | 2% |
| $27,157 | $54,314 | 4% |
| $42,861 | $85,722 | 6% |
| $59,498 | $118,996 | 8% |
| $75,197 | $150,394 | 9.3% |
| $384,109 | $768,218 | 10.3% |
| $460,927 | $921,854 | 11.3% |
| $768,213 | $1,536,426 | 12.3% |
Standard deduction and exemptions
2026 standard deduction: $5,900 single or married filing separately; $11,800 joint, surviving spouse or head of household (2025: $5,706 and $11,412). Personal exemption credit: $158 per person ($316 joint); dependent credit $491. The credits phase out at higher incomes.
What tax breaks do seniors get in California?
Each person 65 or older gets an extra senior exemption credit equal to the personal credit — $158 for 2026. A Senior Head of Household Credit exists for qualifying people 65+. California has not adopted the federal $6,000 senior deduction.
What changed for 2026?
The military retirement exclusion (SB 132) runs for tax years 2025 through 2029. SB 1435 (Ch. 233, 2026) made technical updates to federal conformity. SB 1407, which would raise the military exclusion to $40,000, had not been enacted as of FTB’s October 2026 Tax News. FTB will post complete 2026 tax tables in late December 2026.
The Franchise Tax Board (FTB) published the indexed 2026 brackets and credits in its October 2026 Tax News.
What we couldn’t confirm
- We could not confirm the final legislative status of SB 1407 (a $40,000 military exclusion); FTB reported no enactment as of October 2026.
How California compares with its neighbors
Thinking of moving across the line? Here’s how each bordering state treats retirement income in 2026.
- CaliforniaThis pageLess friendlySocial Security Not taxedTop rate: 12.3% top
- ArizonaFriendlySocial Security Not taxedTop rate: 2.5% flat
- NevadaTax-free retirement incomeSocial Security Not taxedTop rate: None
- OregonLess friendlySocial Security Not taxedTop rate: 9.9% top
State tax is half the picture — check the federal side
California retirement tax questions
Is California tax-friendly for retirees?
We rate California “Less friendly” for 2026. California does not tax Social Security benefits. No retirement income exclusion beyond the new military one. The top income tax rate is 12.3%.
Are required minimum distributions (RMDs) taxed in California?
RMDs are withdrawals from IRAs and 401(k)-type plans, so they follow California’s rules for those accounts. IRA, 401(k) and 403(b) withdrawals are fully taxable.
Is military retirement pay taxed in California?
Partly. For 2025–2029, up to $20,000 of military retirement pay (or Survivor Benefit Plan annuity) is excluded if AGI is $125,000 or less ($250,000 joint); the rest is taxed.
What is California’s income tax rate for 2026?
Nine brackets from 1% to 12.3% in 2026; the top bracket starts above $768,213 single and $1,536,426 married filing jointly. A separate 1% Behavioral Health Services Tax applies to taxable income over $1 million.
Sources for California
Primary sources only. We re-check them whenever an agency publishes new figures.
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