Updated October 4, 2026. Quick answer: Yes. California taxes traditional 401(k) and IRA withdrawals the way federal law does. The Franchise Tax Board’s pension guide says state treatment is “generally the same as the federal treatment of such income”.
More state retirement-income schedules, line by line: California Schedule CA (540) pension lines.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: California tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does California tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: California tax withholding on IRA and 401(k) withdrawals.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does California have an inheritance tax?.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does California tax HSA contributions?.
What California does with 401(k) and IRA withdrawals
The same pension guide covers distributions from IRAs and employer plans under the rule above. California’s 2025 booklet prints a separate 1% tax on taxable income over $1,000,000.
| Item | What the documents say |
|---|---|
| Treatment | Taxable, generally the same as the federal treatment |
| State rates | Graduated, 1.00% to 12.30% on the 2025 single-filer schedule |
| Source | Franchise Tax Board, Publication 1005 and the 2025 Form 540 booklet |
A $40,000 withdrawal
All $40,000 of a traditional 401(k) or IRA withdrawal is part of California taxable income. The tax it adds depends on your other income, because the state applies graduated rates and the top rate on the 2025 schedule is 12.30%.
What changes in 2026
No 2026 rate schedule appears in the documents read for this page.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether California taxes pensions, how California taxes retirement income, whether California taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- 2025 FTB Publication 1005 Pension and Annuity Guidelines: https://www.ftb.ca.gov/forms/2025/2025-1005-publication.pdf
- 2025 California Form 540, Forms & Instructions, Personal Income Tax Booklet: https://www.ftb.ca.gov/forms/2025/2025-540-booklet.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.