California

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.

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.

California 1% Mental Health Services Tax on taxable income above $1,000,000 (per return, all statuses)

“In addition to any other taxes imposed by this part, for each taxable year beginning on or after January 1, 2004, there is hereby imposed on each taxpayer a tax equal to 1 percent of the taxpayer's taxable income in excess of one million dollars ($1,000,000). Notwithstanding any provision of Section 17041, the provisions of Section 17041, relating to filing status and recomputation of the income tax brackets, shall not apply to the tax imposed by this section.”

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.

California 1% Mental Health Services Tax on taxable income above $1,000,000 (per return, all statuses)

“In addition to any other taxes imposed by this part, for each taxable year beginning on or after January 1, 2004, there is hereby imposed on each taxpayer a tax equal to 1 percent of the taxpayer's taxable income in excess of one million dollars ($1,000,000). Notwithstanding any provision of Section 17041, the provisions of Section 17041, relating to filing status and recomputation of the income tax brackets, shall not apply to the tax imposed by this section.”

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.

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.

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.

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.

California does not conform to IRC §1400Z-2 QOZ gain deferral and exclusion

“The provisions of the Internal Revenue Code that are incorporated by reference in this part are the provisions of the Internal Revenue Code as enacted on January 1, 2015, and as subsequently amended and in effect on that date.”

Note: California's fixed-date conformity (IRC as of Jan 1, 2015) predates §1400Z-2 (enacted TCJA 2017); no subsequent legislation adopted QOZ provisions. QOF gain is fully taxable in California in the year of reinvestment.

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.

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.

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.

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.

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.

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.

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.

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.

California joint-return tax is twice the tax on half the taxable income (income-splitting doubles brackets)

“The income tax imposed on a husband and wife making a joint return shall be twice the tax which would be imposed if the taxable income were cut in one-half and the tax were computed as if such one-half were the taxable income of a single individual.”

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.

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.

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.”

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.

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.

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.