If you entered your 1099-R and answered the interview follow up questions , TurboTax will automatically pick up the California exclusion and transfer it to your California state tax section. However, you can also make the adjustment in the California state section- look for a screen that says "Any Pension or Annuity Adjustments?" You can enter the exclusion as a subtraction. (If TurboTax always has it you will not see this or see it with the $20,000 amount already applied).
For taxable years beginning on or after January 1, 2025, and before January 1, 2030, California allows qualified taxpayers to exclude from gross income up to $20,000 of retirement pay from the federal government for service in the uniformed services or annuity payments received pursuant to a U.S. Defense Department Survivor Benefit Plan.
- A qualified taxpayer for purposes of the retirement pay exclusion is, in the case of a surviving spouse or spouse filing a joint return, a taxpayer or taxpayer whose adjusted gross income shown on the federal tax return for the same taxable year does not exceed $250,000. In the case of an individual, the taxpayer’s income may not exceed $125,000.
- A qualified taxpayer for purposes of the annuity exclusion is, in the case of a surviving spouse or spouse filing a joint return, a taxpayer or taxpayer whose adjusted gross income shown on the federal return for the same taxable year does not exceed $250,000. In the case of an individual, the taxpayer’s income may not exceed $125,000.
Retirement and disability
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