How much is the California state tax on a 401 k withdrawal?

California State Tax on 401(k) Withdrawals

1. Your 401(k) Distribution Is Treated as Ordinary Income

In California, any withdrawal from a traditional 401(k) (whether periodic retirement distribution or lump-sum) is generally included in state taxable income and taxed at your regular California income tax rates.

There is no special flat tax rate on 401(k) withdrawals, they’re taxed like wages or other ordinary income.

California income tax rates (2025) are graduated and progressive, currently ranging approximately:

~1% at the lowest income levels up to 13.3% at the top marginal rate for high taxable incomes.

So, your state tax on a 401(k) withdrawal = your taxable income from the distribution × your marginal California tax rate.

2. Early Withdrawal “Penalty” at the State Level (If Under Age 59½)

California also imposes a 2.5% additional state tax penalty on early distributions (similar to the federal 10% penalty) if you take the money before age 59½, unless an exception applies. 

• Federal penalty (10%) for early withdrawals before age 59½
• California early distribution tax (2.5%), state penalty, separate from regular income tax
• Plus regular California income tax on the full withdrawal amount

Example:

If you withdraw $50,000 at age 55:

• California income tax owed = $50,000 × your marginal rate (e.g., 9.3%)
• California early withdrawal tax = $50,000 × 2.5%

3. Key Points for California Taxpayers

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Summary

Traditional 401(k) withdrawals are fully taxable in California at your regular state income tax rate (1%–13.3%).

If under age 59½, California also imposes a 2.5% penalty tax on the distribution.

There’s no special reduced rate or retirement exemption for 401(k) income in California.

Source:

Early Distributions - State of California