Updated October 21, 2026. Quick answer: California Schedule CA (540) starts from your federal return and adjusts it to California law. Lines 4a and 4b cover IRA distributions and lines 5a and 5b cover pensions and annuities, with differences entered in column B as subtractions or column C as additions. The column totals on line 27 go to Form 540.
What this form does
The booklet states the schedule’s purpose this way: “Use Schedule CA (540) to make adjustments to your federal adjusted gross income and to your federal itemized deductions using California law.” The form itself is headed “California Adjustments” and says “Attach this schedule behind Form 540, Side 6 as a supporting California schedule.”
This page covers the IRA and pension lines. California retirement taxes and whether California taxes pensions give the state-level picture.
Who it applies to
The booklet limits who needs the schedule: “If there are no differences between your federal and California income or deductions, do not file Schedule CA (540)”. The form’s part A is headed “Income from federal Form 1040 or 1040-SR”, and column A takes “the same amounts entered on your federal Form 1040”.
For the uniformed services retirement exclusion, the booklet puts conditions on the line itself: “The qualified taxpayer’s federal AGI must not exceed $125,000”. It also says “The exclusion is capped at $20,000 for a surviving spouse, spouses filing a joint return, and any other individual who did not exceed the federal AGI limits.”
The lines, one by one
| Line | What the form says |
|---|---|
| Column A | “Federal Amounts” “taxable amounts from your federal tax return” |
| Column B | “Subtractions”. Booklet: “Use these columns to enter subtractions and additions to the federal amounts in column A that are necessary because of differences between California and federal law.” |
| Column C | “Additions” |
| Line 4a and 4b | “IRA distributions. See instructions.” Booklet: “Generally, no adjustments are made on this line.” |
| Line 4, column B | “Less than the amount taxable under federal law, enter the difference in column B.” |
| Line 4, column C | “More than the amount taxable under federal law, enter the difference in column C.” |
| Line 5a and 5b | “Pensions and annuities. See instructions.” Booklet: “Generally, no adjustments are made on this line.” |
| Line 5, railroad | “If you received a federal Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board, for railroad retirement benefits and included all or part of these benefits in taxable income in column A, enter the taxable benefit amount in column B.” |
| Line 5, annuity rule | “If you began receiving a retirement annuity between July 1, 1986, and January 1, 1987, and elected to use the three-year rule for California purposes and the annuity rules for federal purposes, enter in column C the amount of the annuity payments you excluded for federal purposes.” |
| Line 5, uniformed services | “If you 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, and you included all or part of these payments in taxable income in column A, enter the taxable payment amount in column B, not to exceed $20,000 for each type of payments described in this paragraph.” |
For line 4 the booklet adds a pointer to a separate publication: “Get FTB Pub. 1005 for more information and worksheets for figuring the adjustment to enter on this line, if any.” Line 5 carries a note about early distributions that goes to another form: “You may have to pay an additional tax if you received a taxable distribution from a qualified retirement plan before reaching age”.
The figures the form prints
Each figure here sits in one running sentence. The booklet’s introduction to the military retirement exclusion reads “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.”
The line 5 instruction repeats the cap, and the AGI limit sentence reads “The qualified taxpayer’s federal AGI must not exceed $125,000 (or $250,000 for a surviving spouse or spouses filing a joint return).” For how California treats military pay as a topic, see California military retirement.
Where the result goes next
On Form 540 the booklet says “Enter on line 14 the amount from” Schedule CA (540), “line 27, column B”. For additions, the line 16 text says “Enter on line 16 the amount from” the same line of the schedule, “line 27, column C”.
Line 27 of the schedule begins with “Subtract line 26 from line 10.” Your payers’ figures come from Form 1099-R; see 1099-R boxes explained, Form 1040 line 5a and 5b and Form 1040 line 4a and 4b for how the federal return reports the same payments. For how California treats California 401(k) and IRA withdrawals, see that page.
Edition and line numbers
This page reads the 2025 Schedule CA (540) and the 2025 Form 540 California Resident Income Tax Return booklet for tax year 2025, the current file California Franchise Tax Board served on 2026-10-21. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Adjusting IRA or pension lines by habit. The booklet says “Generally, no adjustments are made on this line.”
- Entering railroad retirement benefits in the wrong column. The booklet says “enter the taxable benefit amount in column B.”
- Excluding more than the military retirement cap. The booklet says “not to exceed $20,000 for each type of payments described in this paragraph”
Related: California retirement taxes, whether California taxes pensions, California 401(k) and IRA withdrawals, California military retirement, and Form 1040 line 4a and 4b.
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Answer againSources
- 2025 Schedule CA (540), California Adjustments, Residents, California Franchise Tax Board: www.ftb.ca.gov
- 2025 Form 540 California Resident Income Tax Return booklet, California Franchise Tax Board: www.ftb.ca.gov
Read from the state revenue documents linked above on October 21, 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.