California
CA · state · 22 cited facts
| Category | Provision | Value | Source |
|---|---|---|---|
| trust-nexus | Incomplete-gift nongrantor trust / ING (income tax reach) | BLOCKED by statute: R&TC 17082 (SB 131, 2023) taxes the ING's income to the CA-resident grantor as if a grantor trust, retroactive to TY2023 | sources (1)Cal. Rev. & Tax. Code Sec. 17082, enacted by SB 131, Stats. 2023, ch. 55; amended by SB 376, Stats. 2025, ch. 410 · high confidence · as of 2026-07-13 · TY 2026 California taxes ING income to the resident grantor (retroactive to taxable years beginning on or after January 1, 2023) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayer's gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayer's taxable income if the trust in its entirety were treated as a grantor trust under Section 17731. Note: The enacting bill is SB 131 (2023 budget trailer), not AB 1097 (a use-tax bill). Charitable exception: the attribution does not apply if the fiduciary elects resident-nongrantor treatment and 90% or more of DNI goes to a 501(c)(3). SB 376 (2025) carves charitable remainder trusts out of the ING definition, retroactive to the same 2023 start. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17082 |
| estate-none | Estate and inheritance tax | None | sources (1)CA State Controller estate tax page · high confidence · as of 2026-07-02 · TY 2025 No California Estate Tax Return required for deaths on or after Jan 1, 2005 For decedents that die on or after January 1, 2005, there is no longer a requirement to file a California Estate Tax Return. Note: Page attributes the change to EGTRRA 2001 (phase-out of the state death tax credit); no CA statute cited on page. https://www.sco.ca.gov/ardtax_estate_tax.html |
| rate | Top income tax rate (TY2025) | 12.3% on income above $1,485,906 MFJ (+ 1% MHST above $1,000,000 = 13.3% combined top) | sources (1)Cal. Rev. & Tax. Code §17041 (1% to 9.3% base schedule); Cal. Const. art. XIII, §36(f) (Prop 30/55: 10.3%/11.3%/12.3% brackets) · high confidence · as of 2026-07-02 · TY 2025 California income tax: 1% to 12.3% graduated on California taxable income (TY2025 MFJ) 17041. (a)(1) There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident... taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year. Note: RTC §17041's own schedule tops out at 9.3% (base-year figures, FTB-indexed annually via CPI; the statute contains no current-year dollar thresholds). The 10.3%/11.3%/12.3% brackets are imposed by Cal. Const. art. XIII, §36(f) (Prop 30, 2012, extended by Prop 55, 2016), the companion authority. The TY2025 MFJ dollar amounts (1% to $22,158; 2% $22,159-$52,528; 4% $52,529-$82,904; 6% $82,905-$115,084; 8% $115,085-$145,448; 9.3% $145,449-$742,958; 10.3% $742,959-$891,542; 11.3% $891,543-$1,485,906; 12.3% above $1,485,906) are FTB-computed annual CPI adjustments, not statutory text. Capital gains are taxed as ordinary income; no preferential CG rate in California. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17041 |
| surcharge | Behavioral Health Services Tax (previously Mental Health Services Tax) | 1% on taxable income above $1,000,000 per return (not doubled MFJ; not halved MFS); FTB renamed it the Behavioral Health Services Tax in the current 540-ES instructions | sources (1)Cal. Rev. & Tax. Code §17043 · high confidence · as of 2026-07-20 · TY 2025 California 1% Mental Health Services Tax on taxable income above $1,000,000 (per return, all statuses) For each taxable year beginning on or after January 1, 2005, in addition to any other taxes imposed by this part, an additional tax shall be imposed at the rate of 1 percent on that portion of a taxpayer's taxable income in excess of one million dollars ($1,000,000). Note: Because §17043 explicitly disapplies §17041's filing-status recomputation, the $1M threshold is identical for single, MFJ, and MFS filers a marriage penalty at the margin. Combined top rate: 12.3% + 1.0% = 13.3% on income above $1M. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17043 |
| threshold | MHST threshold (all filing statuses) | $1,000,000 per return same for single, MFJ, and MFS (marriage penalty at the margin) | sources (1)Cal. Rev. & Tax. Code §17043 · high confidence · as of 2026-07-20 · TY 2025 California 1% Mental Health Services Tax on taxable income above $1,000,000 (per return, all statuses) For each taxable year beginning on or after January 1, 2005, in addition to any other taxes imposed by this part, an additional tax shall be imposed at the rate of 1 percent on that portion of a taxpayer's taxable income in excess of one million dollars ($1,000,000). Note: Because §17043 explicitly disapplies §17041's filing-status recomputation, the $1M threshold is identical for single, MFJ, and MFS filers a marriage penalty at the margin. Combined top rate: 12.3% + 1.0% = 13.3% on income above $1M. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17043 |
| conformity | Loss carryforward | Conforms to IRC §1212 indefinite federal carryforward applies (own CA computation) | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| muni-instate | In-state muni bond interest | Exempt: Cal. Rev. & Tax. Code §17133 (CA constitutionally prohibited from taxing own bonds) | sources (1)Cal. Rev. & Tax. Code §17133 (in-state exempt) and §17143 (out-of-state: §103 does not apply) · high confidence · as of 2026-06-22 · TY 2025 CA exempts in-state muni bonds; §17143 decouples from IRC §103 so out-of-state muni interest is taxable Sections 103 and 141 to 150, inclusive, of the Internal Revenue Code, relating to interest on governmental obligations, shall not apply. Note: Cal. Rev. & Tax. Code §17143 decouples from IRC §103, meaning out-of-state muni bond interest is fully taxable in California. Cal. Rev. & Tax. Code §17133 separately exempts California-issued muni bonds. This combination results in California taxing out-of-state muni interest while exempting in-state bonds. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17143 |
| muni-outstate | Out-of-state muni bond interest | Taxable: Cal. Rev. & Tax. Code §17143 decouples from IRC §103; out-of-state muni interest fully taxable | sources (1)Cal. Rev. & Tax. Code §17133 (in-state exempt) and §17143 (out-of-state: §103 does not apply) · high confidence · as of 2026-06-22 · TY 2025 CA exempts in-state muni bonds; §17143 decouples from IRC §103 so out-of-state muni interest is taxable Sections 103 and 141 to 150, inclusive, of the Internal Revenue Code, relating to interest on governmental obligations, shall not apply. Note: Cal. Rev. & Tax. Code §17143 decouples from IRC §103, meaning out-of-state muni bond interest is fully taxable in California. Cal. Rev. & Tax. Code §17133 separately exempts California-issued muni bonds. This combination results in California taxing out-of-state muni interest while exempting in-state bonds. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17143 |
| qoz-conformity | QOZ conformity (IRC §1400Z-2) | Non-conforms to IRC §1400Z-2; QOZ gain deferral not recognized, gain taxable at state level | sources (1)Cal. Rev. & Tax. Code §17024.5 · high confidence · as of 2026-07-20 · TY 2025 California does not conform to IRC §1400Z-2 QOZ gain deferral and exclusion Unless otherwise specifically provided, the terms "Internal Revenue Code," "Internal Revenue Code of 1954," or "Internal Revenue Code of 1986," for purposes of this part, mean Title 26 of the United States Code, including all amendments thereto as enacted on the specified date for the applicable taxable year as follows: Note: California uses STATIC, per-taxable-year conformity (RTC §17024.5(a)(1): the IRC 'as enacted on the specified date', a dated table now running to January 1, 2025), NOT rolling conformity. Even so, California does not conform to IRC §1400Z-2: the FTB states it directly on the 2024/2025 Schedule D(540) instructions ('California does not conform to the deferral and exclusion of capital gains reinvested or invested in qualified opportunity zone funds under IRC Sections 1400Z-1 and 1400Z-2. Enter the entire gain amount in column (e).'). So QOF gain is fully taxable in California in the year of reinvestment. A prior version of this fact quoted a reconstructed §17024.5 sentence and rested the value on a 'conformity date predates §1400Z-2' rationale that is incorrect (the specified date is 2025, after §1400Z-2's 2017 enactment); corrected. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17024.5 |
| qsbs-conformity | QSBS conformity (IRC §1202) | Non-conforms to IRC §1202; QSBS gain exclusion not recognized, gain fully taxable at state level | sources (1)Cal. Rev. & Tax. Code §18152 · high confidence · as of 2026-07-03 · TY 2025 California does not conform to IRC §1202 QSBS gain exclusion Section 1202 of the Internal Revenue Code, relating to 50-percent exclusion for gain from certain small business stock, does not apply. Note: Cal. R&TC §18152 explicitly decouples from IRC §1202; QSBS gain is fully taxable in California regardless of federal exclusion. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=18152 |
| agency-obligations | FNMA/FHLMC bond interest | Taxable: California starts from federal AGI (which includes FNMA/FHLMC interest); 31 U.S.C. §3124 preempts only direct U.S. government obligation taxation; FNMA/FHLMC are GSEs without a federal bondholder exemption | sources (1)Cal. Rev. & Tax. Code §17041; Cal. Rev. & Tax. Code §17024.5 · medium confidence · as of 2026-06-20 · TY 2025 California taxes FNMA and FHLMC bond interest: California starts from federal AGI (which includes FNMA/FHLMC interest); 31 U.S.C. §3124 preempts state taxation only of direct U.S. obligations; FNMA/FHLMC are not direct U.S. obligations Except as otherwise provided, for purposes of this part, 'gross income,' 'adjusted gross income,' and 'taxable income' have the same meaning as in the Internal Revenue Code. Note: California starts from federal AGI. FNMA and FHLMC bond interest is INCLUDED in federal AGI (not excluded by IRC §103). 31 U.S.C. §3124 preempts state taxation only of obligations of the United States Government; FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) are GSEs with no bondholder exemption statute. R&TC §17133 excludes income excluded under the IRC, but FNMA/FHLMC interest is NOT IRC-excluded. No CDTFA named-entity publication found; confidence: medium. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17024.5 |
| dividend-qualified | Qualified dividend rate (IRC §1(h)(11)) | Ordinary rate: California has no IRC §1(h)(11) preferential rate; qualified dividends taxed at ordinary rates up to 13.3% (12.3% + 1% MHST above $1M) | sources (1)Cal. Rev. & Tax. Code §17041 (1% to 9.3% base schedule); Cal. Const. art. XIII, §36(f) (Prop 30/55: 10.3%/11.3%/12.3% brackets) · high confidence · as of 2026-07-02 · TY 2025 California income tax: 1% to 12.3% graduated on California taxable income (TY2025 MFJ) 17041. (a)(1) There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident... taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year. Note: RTC §17041's own schedule tops out at 9.3% (base-year figures, FTB-indexed annually via CPI; the statute contains no current-year dollar thresholds). The 10.3%/11.3%/12.3% brackets are imposed by Cal. Const. art. XIII, §36(f) (Prop 30, 2012, extended by Prop 55, 2016), the companion authority. The TY2025 MFJ dollar amounts (1% to $22,158; 2% $22,159-$52,528; 4% $52,529-$82,904; 6% $82,905-$115,084; 8% $115,085-$145,448; 9.3% $145,449-$742,958; 10.3% $742,959-$891,542; 11.3% $891,543-$1,485,906; 12.3% above $1,485,906) are FTB-computed annual CPI adjustments, not statutory text. Capital gains are taxed as ordinary income; no preferential CG rate in California. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17041 |
| treasury | U.S. Treasury interest | Exempt: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations (T-bills, T-notes, T-bonds, TIPS, I-bonds) | sources (1)31 U.S.C. §3124(a) · high confidence · as of 2026-06-20 · TY 2025 U.S. Treasury interest exempt from California income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax. Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3124 |
| fhlb-ffcb | FHLB and FFCB bond interest | Exempt: 12 U.S.C. §1433 (Federal Home Loan Bank Act) and 12 U.S.C. §2023 (Farm Credit Act) mandate state tax exemption for FHLB and FFCB securities | sources (2)12 U.S.C. §1433 (Federal Home Loan Bank Act) · high confidence · as of 2026-06-20 · TY 2025 FHLB and FFCB bond interest exempt from California income tax: federal enabling statutes mandate state tax exemption Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority. Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1433&num=0&edition=prelim12 U.S.C. §2023 (Farm Credit Act) · high confidence · as of 2026-06-20 · TY 2025 Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124). Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2023&num=0&edition=prelim |
| carryback | Capital loss carryback | None: IRC §1212(b) provides carryforward only for non-corporate taxpayers; no carryback to prior years (IRC §1212 predates California's fixed-date conformity) | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| character | Long-term capital gains treatment | Ordinary rate: no preferential long-term rate; capital gains taxed as ordinary income up to 13.3% (12.3% base plus 1% MHST above $1M per Cal. Rev. & Tax. Code §17041 and §17043) | sources (1)Cal. Rev. & Tax. Code §17041 (1% to 9.3% base schedule); Cal. Const. art. XIII, §36(f) (Prop 30/55: 10.3%/11.3%/12.3% brackets) · high confidence · as of 2026-07-02 · TY 2025 California income tax: 1% to 12.3% graduated on California taxable income (TY2025 MFJ) 17041. (a)(1) There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident... taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year. Note: RTC §17041's own schedule tops out at 9.3% (base-year figures, FTB-indexed annually via CPI; the statute contains no current-year dollar thresholds). The 10.3%/11.3%/12.3% brackets are imposed by Cal. Const. art. XIII, §36(f) (Prop 30, 2012, extended by Prop 55, 2016), the companion authority. The TY2025 MFJ dollar amounts (1% to $22,158; 2% $22,159-$52,528; 4% $52,529-$82,904; 6% $82,905-$115,084; 8% $115,085-$145,448; 9.3% $145,449-$742,958; 10.3% $742,959-$891,542; 11.3% $891,543-$1,485,906; 12.3% above $1,485,906) are FTB-computed annual CPI adjustments, not statutory text. Capital gains are taxed as ordinary income; no preferential CG rate in California. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17041 |
| filing-status-partial | Filing status: partial MFJ widening (neutral on graduated schedule; penalty above $1M MHST) | Partial: Cal. Rev. & Tax. Code §17045 doubles MFJ brackets exactly on the graduated rate schedule (neutral below $1M); §17043 Mental Health Services Tax $1M threshold is NOT doubled for MFJ, creating a marriage penalty on MHST above that threshold | sources (1)Cal. Rev. & Tax. Code §17045 · high confidence · as of 2026-07-20 · TY 2025 California joint-return tax is twice the tax on half the taxable income (income-splitting doubles brackets) In the case of a joint return of spouses under Section 18521, the tax imposed by Section 17041 shall be twice the tax which would be imposed if the taxable income were cut in one-half. Note: This produces exactly doubled brackets for MFJ (marriage-neutral on the graduated schedule). But the §17043 MHST does NOT income-split, so the $1M surtax threshold is a marriage penalty. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17045 |
| community-property | Community property state | Community property state: all property acquired during marriage is community property; each spouse owns one-half (Cal. Fam. Code § 760); applies to registered domestic partners (Cal. Fam. Code § 297.5) | sources (1)Cal. Fam. Code § 760 · high confidence · as of 2026-06-21 · TY 2025 California is a community property state: all property acquired during marriage is community property (Cal. Fam. Code § 760) Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. Note: California community property law dates to statehood (1850). Cal. Fam. Code § 760 is the primary definition. California also recognizes registered domestic partners as having community property rights (Cal. Fam. Code § 297.5). Federal IRC § 66 applies for spouses living apart. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=760.&lawCode=FAC |
| migration-loss-conformity | Migration loss carryforward conformity | Recalculate: California requires recalculating the capital loss carryforward bank using California rules as if the taxpayer had been a California resident in all prior years per FTB Pub 1031. | sources (1)FTB Publication 1031 (Section G) · high confidence · as of 2026-06-26 · TY 2025 Guidelines for Determining Resident Status - Capital Losses Nonresidents or part-year residents who have capital losses from out-of-state sources before becoming a California resident cannot carry forward those losses to California. You must recalculate your capital loss carryover using California rules as if you were a resident in all prior years.https://www.ftb.ca.gov/forms/2024/2024-1031-publication.pdf |
| ptet-available | Pass-through entity tax (SALT-cap workaround) available | Yes (R&TC §19900; 2021-2030) | sources (1)Cal. R&TC §19900-19906 · medium confidence · as of 2026-06-29 · TY 2025 California pass-through entity elective tax is 9.3%; qualified owners receive a credit annually pay an elective tax computed at 9.3 percent Note: SALT-cap workaround: a qualifying entity (partnership/S-corp) elects to pay 9.3% on qualified net income at the entity level; qualified owners take a California credit (Form FTB 3804-CR). Effective taxable years 2021 through 2030 (sunsets before 1/1/2031). Confidence medium: FTB guidance page. https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/index.html |
| ptet-rate | Pass-through entity elective tax rate | 9.3% | sources (1)Cal. R&TC §19900-19906 · medium confidence · as of 2026-06-29 · TY 2025 California pass-through entity elective tax is 9.3%; qualified owners receive a credit annually pay an elective tax computed at 9.3 percent Note: SALT-cap workaround: a qualifying entity (partnership/S-corp) elects to pay 9.3% on qualified net income at the entity level; qualified owners take a California credit (Form FTB 3804-CR). Effective taxable years 2021 through 2030 (sunsets before 1/1/2031). Confidence medium: FTB guidance page. https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/index.html |
| ptet-credit-mechanism | PTET owner recovery mechanism | Credit (Form FTB 3804-CR) | sources (1)Cal. R&TC §19900-19906 · medium confidence · as of 2026-06-29 · TY 2025 California pass-through entity elective tax is 9.3%; qualified owners receive a credit annually pay an elective tax computed at 9.3 percent Note: SALT-cap workaround: a qualifying entity (partnership/S-corp) elects to pay 9.3% on qualified net income at the entity level; qualified owners take a California credit (Form FTB 3804-CR). Effective taxable years 2021 through 2030 (sunsets before 1/1/2031). Confidence medium: FTB guidance page. https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/index.html |