Updated October 24, 2026. Quick answer: Line 63 of California Form 540 collects other taxes and credit recapture. Two of the items the booklet names relate to retirement plans: additional tax on an early distribution from a qualified retirement plan, reported with form FTB 3805P, and additional tax on certain deferred compensation under IRC Section 409A. The line is added into total tax on line 64.
What this line does
The form’s label reads “Other taxes and credit recapture. See instructions”, and the booklet’s heading is “Other Taxes and Credit Recapture”. Under the booklet’s Other Taxes heading, the instruction is “Attach the specific form or statement required for each item below.” Line 63 sits on Form 540 Side 3. This page is part of the California Form 540 line by line series.
Who it applies to
For a retirement plan distribution, the condition is printed as one sentence: “If you received an early distribution of a qualified retirement plan and were required to report additional tax on your federal tax return, you may also be required to report additional tax on your California tax return.”
For deferred compensation the booklet says “In general, California conforms to federal law for income received under IRC Section 409A on a nonqualified deferred compensation (NQDC) plan”. For the federal return’s side of retirement distributions, see Form 1040 line 4a and 4b.
What the instructions say
| Item | What the form says |
|---|---|
| Early distribution | “If you received an early distribution of a qualified retirement plan and were required to report additional tax on your federal tax return, you may also be required to report additional tax on your California tax return.” |
| Form to get | “Get form FTB 3805P, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts.” |
| How to report it | “If required to report additional tax, report it on line 63 and write” FTB 3805P “to the left of the amount.” |
| Section 409A income | “In general, California conforms to federal law for income received under IRC Section 409A on a nonqualified deferred compensation (NQDC) plan and discounted stock options and stock appreciation rights.” |
| Section 409A tax | “Income received under IRC Section 409A is subject to an additional 5% tax of the amount required to be included in income plus interest.” |
| How to report 409A | “Include the additional tax, if any, on line 63.” Then write NQDC “on the dotted line to the left of the amount.” |
| Credit recapture forms | “FTB 3531, California Competes Tax Credit”, “FTB 3540, Credit Carryover and Recapture Summary”, “FTB 3554, New Employment Credit” and “FTB 3835, State Historic Rehabilitation Tax Credit” |
| Credit recapture reporting | “Include the additional tax for credit recapture, if any, on line 63. Write the form number and the amount on the dotted line to the left of the amount on line 63.” |
The booklet has one more paragraph on line 63 about a different kind of interest; this page leaves it out because it is not about retirement distributions.
The figures the form prints
One figure sits in the Section 409A sentence: “Income received under IRC Section 409A is subject to an additional 5% tax of the amount required to be included in income plus interest.”.
Where the result goes next
The booklet says “Include the additional tax, if any, on line 63.” Line 63 then feeds the total: “Add line 48, line 61, line 62, and line 63. This is your total tax.” For the state-level view of retirement withdrawals see California retirement taxes and California 401(k) and IRA withdrawals, and for the federal form’s version of other taxes see Form 1040 lines 22 to 24.
Edition and line numbers
This page reads California 540 Forms and Instructions, 2025 Personal Income Tax Booklet, and Form 540, California Resident Income Tax Return (2025), both from the Franchise Tax Board, for tax year 2025, the current file the Franchise Tax Board served on 2026-10-24. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Assuming a federal additional tax does not carry to California. The booklet says “you may also be required to report additional tax on your California tax return.”
- Leaving off the form reference on the line. For the retirement plan tax, the instruction is “If required to report additional tax, report it on line 63 and write” FTB 3805P beside the amount.
- Reporting Section 409A income with no label. The booklet says to “Include the additional tax, if any, on line 63.” and write NQDC on the dotted line.
Related: California retirement taxes, California 401(k) and IRA withdrawals, whether California taxes pensions, Form 1040 lines 22 to 24, and Form 1040 line 4a and 4b.
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Answer againSources
- California 540 Forms and Instructions, 2025 Personal Income Tax Booklet, Franchise Tax Board: www.ftb.ca.gov
- Form 540, California Resident Income Tax Return (2025), Franchise Tax Board: www.ftb.ca.gov
- Related official page (not quoted): Franchise Tax Board, 2025 Personal Income Tax Booklet page: www.ftb.ca.gov
Read from the state revenue documents linked above on October 24, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.