California Social Security Tax Rate 2023 - 2024
Unlike other states, California does not tax Social Security income. However, California considers retirement account income such as 401(k) withdrawals and IRA distributions taxable.
In California, Social Security is financed through a dedicated payroll tax (FICA or SECA) that employers and employees pay. It applies to wages up to the taxable maximum of $168,600 in 2024. Currently, 6.2 percent of wages are withheld from employee paychecks and 12.4 percent is withheld from self-employed income. The resulting taxes are used to fund retirement benefits for all Americans.
Social Security benefits are not taxed at the state level in California. However, the state does tax other retirement income, such as pensions and retirement account withdrawals. The total amount of these taxes is based on your state income tax bracket and filing status. The state also taxes interest, dividends, and municipal and county income taxes.
How Does Social Security Taxation Work in California?
Social Security benefits are not subject to California taxes. However, other sources of retirement income are. These include withdrawals from 401(k) accounts and traditional pensions. In addition, the state has some of the highest sales tax rates in the country. To learn more about how these taxes work, consult a financial advisor.
In general, only a small percentage of Social Security benefits are taxable. This proportion rises as total retirement income increases. The percentage of taxable Social Security benefits depends on your filing status and the amount of other income you receive during the year. Some supplemental Social Security benefits are not taxed, including Supplemental Security Income and disability insurance payments.
Social Security is financed by a dedicated payroll tax, with employees and employers paying 6.2 percent of earnings, up to the taxable maximum of $168,600 (in 2024). The taxable maximum is set by law and rises each year as wages increase.
How to File California Social Security Tax?
Generally, only a portion of your Social Security benefits are taxable. The amount you pay depends on your filing status and income level. The SSA will send you a form SSA-1099 each January that shows the net Social Security payments you received throughout the year. You report this information on your annual tax return.
If your Social Security income is above a certain threshold, you will be required to pay state taxes. However, most states do not tax Social Security income. In addition, the SSA can withhold your state taxes from your benefit payments.
In order to determine how much your Social Security benefits are taxable, you must first calculate your provisional income. Add your adjusted gross income (AGI), nontaxable interest income, and one-half of your Social Security benefits to do this. Next, divide this amount by your marginal tax rate. The marginal tax rate schedules are on the California Franchise Tax Board website.
