Does California tax pensions and retirement income?
Taxed, with narrow exceptions
Yes. California generally taxes pensions the same way the federal return does; its instructions say no adjustment is usually made for them. For 2025 through 2029 it allows an exclusion of up to $20,000 of military retirement pay.
In the state's own words
Copied word for word from the official document linked below each quote:
“Line 5a and Line 5b – Pensions and Annuities Generally, no adjustments are made on this line.”
“For taxable years beginning on or after January 1, 2025, and before January 1, 2030, California law allows an exclusion from gross income for a qualified taxpayer that received retirement pay from the federal government for service in the uniformed services or annuity payments pursuant to a United States Department of Defense Survivor Benefit Plan during the taxable year, not to exceed $20,000.”
And Social Security?
No. California excludes Social Security benefits from taxable income. The California Social Security page quotes the rule.
Federal tax still applies
Whatever California does, pensions, annuities and traditional IRA or 401(k) withdrawals are generally taxable on your federal return. See the federal tax brackets and, if you are 73 or older, the required minimum distribution calculator.
State rules change, and the details (age limits, income limits, which plans qualify) matter. Check with the California Franchise Tax Board before you file or move.
Other states in the same group
Check our work
The answer above comes from this document. Follow the link and compare.
- 2025 Instructions for Schedule CA (540NR)California Franchise Tax Board. Read on November 12, 2026.