California tax deductions and write-offs (2026)

Partly: only the vehicle license fee (VLF) line on your California registration bill is deductible, not the other fees.

Yes on your federal return if you itemize, within the $40,400 SALT cap. California adds its own break: CA itemizers can deduct home property taxes on Schedule CA without the federal SALT cap.

Yes: California offers the Nonrefundable Renter's Credit. Nonrefundable credit of $60 for single or married-filing-separately filers and $120 for joint, head-of-household, or surviving-spouse filers who rented their main California home for at least half the year; claimed on Form 540, 540 2EZ, or 540NR. California AGI of $53,994 or less (single/MFS) or $107,987 or less (joint/HOH/surviving spouse) for 2025, adjusted annually; cannot live with someone who claims you as a dependent; no homeowner's property tax exemption that year; rental must not be tax-exempt.

Partly. For tax years 2025 through 2029, California lets retirees exclude up to $20,000 of military retired pay if federal AGI is $125,000 or less ($250,000 for joint filers and surviving spouses); retirees above those limits are taxed in full. A separate exclusion of up to $20,000 applies to DoD Survivor Benefit Plan annuities, with the same AGI limits. Before 2025 California taxed military retired pay fully. SB 1407 (2026), which would raise both caps to $40,000 from 2026 and extend them through 2036, passed the Senate but was held in Assembly Appropriations on Aug. 13, 2026, so it is not law. Other retirement income: Pensions and 401(k)/IRA withdrawals are fully taxed as ordinary income; California has no retirement income exclusion.

Yes. Pensions and 401(k)/IRA withdrawals are fully taxed as ordinary income; California has no retirement income exclusion.

No. California does not tax U.S. Social Security benefits, including retirement, survivor and disability benefits; the federally taxable amount is subtracted on Schedule CA. Foreign social security benefits are taxable in California as annuity income.

Yes: California offers the California Earned Income Tax Credit (CalEITC), Own formula (not a flat % of federal). Tax year 2025: up to $302 with no children to $3,756 with 3+ children; earned income up to $32,900 (refundable). ITIN filers eligible; age 18+ with no upper age limit for workers without children. Can pair with the Young Child Tax Credit (up to $1,189 for 2025, child under 6). FTB had not published 2026 amounts when checked; figures shown are for 2025 and are inflation-adjusted each year.

Only instead of income tax: itemizers in California pick sales tax (7.25% state rate, about 9.03% with local taxes) or state income tax, whichever is bigger. The 7.25% statewide rate includes a mandatory 1.25% local tax, and district taxes add more; vehicles and undocumented vessels are taxed at the rate where the buyer registers them.

No: California doesn't offer a deduction or credit for 529 contributions. No deduction; CA taxes K-12 distributions and imposes a 2.5% state penalty on nonqualified earnings. A 2026 deduction bill failed.

Yes for state tax: California still lets employees itemize union dues and unreimbursed job costs above 2% of AGI.

Yes: Young Child Tax Credit: up to $1,189 per tax return (not per child) for 2025 if you have a child under 6 and qualify for CalEITC (or have $0 or negative earned income). Phases out between earned income of $27,425 and $32,900. Refundable. Amounts are indexed annually.

Yes, as a business expense: California charges $70 to form an LLC; ongoing: $20 Statement of Information, every 2 years (initial within 90 days of formation). $800 annual LLC tax, plus LLC fee if total CA income >= $250k: $900 ($250k-$499,999), $2,500 ($500k-$999,999), $6,000 ($1M-$4,999,999), $11,790 ($5M+). $800 tax due 15th day of 4th month of tax year; estimated LLC fee due 15th day of 6th month.

California taxes income up to 13.3% (including a 1% surcharge over $1M), taxes HSA contributions and gains, still allows itemized unreimbursed employee expenses, and doesn't tax Social Security.