Retiring in California: what taxes actually cost you
The short answer
On $80,000 of retirement income, California costs about $6,538 a year across state income, property and sales tax. That ranks 23 of 51, or $97 below the median state. State income tax alone is $2,095, which is 2.6% of gross income.
Run it on your own numbers
The figures above use a reference profile. Change them and every number on this page moves, including the ranking.
How California treats retirement income
California runs a graduated income tax from 1% to 12.3%, with the top rate starting at $677,275 of taxable income for a single filer.
Social Security
Not taxed
Pension income
Taxed as ordinary income
401(k) and IRA withdrawals
Taxed as ordinary income
Capital gains
Taxed as ordinary income
Property tax
Averages 0.73% of assessed value, so $2,920 a year on a $400K home.
Sales tax
State rate of 7.25%, before any local addition.
Worth knowing: High marginal rates. Social Security exempt. No retirement income exemption.
Where California sits against the rest
The spread across all 51 runs from $3,280 in Wyoming to $14,004 in Connecticut, a difference of $10,724 a year on the same income.
Five cheapest on these numbers
| State | Total tax |
|---|---|
| Wyoming | $3,280 |
| Nevada | $3,639 |
| Colorado | $4,009 |
| Tennessee | $4,310 |
| Louisiana | $4,678 |
Five most expensive on these numbers
| State | Total tax |
|---|---|
| Connecticut | $14,004 |
| New Jersey | $12,953 |
| Vermont | $12,755 |
| Kansas | $11,108 |
| Minnesota | $10,888 |
Worth keeping in proportion. The gap between the best and worst state here is real money, but it is smaller than the gap between two housing markets, and it is far smaller than the effect of your withdrawal rate. Safe withdrawal rate covers that one.
Common questions
Does California tax Social Security?
No. California does not tax Social Security benefits at the state level. Federal tax on benefits still applies depending on your combined income.
How much tax would a retiree pay in California?
On $80,000 of retirement income with a $400,000 home and $70,000 of annual spending, California works out at roughly $6,538 a year across income, property and sales tax. That ranks 23 of 51, against a median of $6,635.
Does California tax 401(k) and IRA withdrawals?
Yes. California taxes withdrawals from 401(k)s and IRAs as ordinary income, with no retirement-specific exclusion.
Is California a good state to retire in for taxes?
Around the middle of the pack. On the reference profile it costs $97 less than the median state, and $3,258 more than Wyoming, which is the cheapest. Tax is one input though. Cost of living, housing and proximity to family usually move a retirement budget further than the tax code does.
Retirement taxes in another state
Related: Taxes in retirement, Withdrawal order, Roth conversions, All 51 states.