Tax season is approaching, making it a great time to explore ways to maximize savings—especially if you’re nearing retirement when taxes can significantly affect your plans.

At Bulman Wealth Group, we’re passionate about helping Californians turn their retirement dreams into reality. Through thoughtful planning and decades of experience, our financial advisors in California aim to make navigating complex retirement planning simple so you can focus on building the future you deserve.

This article covers key tax planning tips for Californians, offering strategies to help position your finances for a more confident retirement.

The Unique Tax Challenges Facing California Pre-Retirees

High State Income Tax

California has one of the highest state income tax rates in the U.S., ranging from 1% to 13.3% based on income. Most retirement income—including 401(k) distributions, traditional IRAs, and pensions—is taxable at the state level. Understanding these taxes is key to effective retirement planning in California for pre-retirees.

Property Taxes

While California’s Proposition 13 limits annual property tax increases, homeowners still face notable costs. High property values mean that even with capped growth, property taxes can consume a significant portion of a retiree’s budget. Seniors may benefit from certain property tax exemptions or transfer provisions, which can help manage these expenses over time.

Unique State Deductions and Credits

California offers specific deductions and credits that may benefit pre-retirees. While not as extensive as federal options, programs like the Senior Head of Household Credit or property tax postponement programs can provide modest relief. Additionally, California does not tax Social Security benefits, which can ease the overall tax burden in retirement. Exploring these options is worthwhile to see how they fit into your broader tax strategy.

Key Tax Planning Strategies for California Pre-Retirees

Tax-Advantaged Accounts

Maximizing tax-advantaged retirement accounts is a key strategy for managing taxes and building retirement savings. Here are the 2025 contribution limits for various plans.

401(k), 403(b), and 457 Plans

If your employer offers matching contributions, aim to contribute at least enough to receive the full match—it’s essentially extra money added to your retirement savings.

• Employee contribution limit: $23,500.
• Catch-up contributions (Age 50 and over): Additional $7,500, totaling $31,000.
• Special catch-up contributions (Ages 60 to 63): Additional $11,250, permitting a total of $34,750.

Roth IRAs

While contributions to Roth IRAs are made with after-tax dollars and are not deductible, the earnings grow tax-free, providing potential tax benefits in retirement.

• Contribution limit: $7,000.
• Catch-up contributions (Age 50 and over): Additional $1,000, for a total of $8,000.

Self-Employed Retirement Plans

• SEP IRA: Contribute up to 25% of compensation, with a maximum of $70,000.
• Solo 401(k): As both employee and employer, you can contribute up to $23,500 plus an additional 25% of compensation, with total contributions not exceeding $70,000.

Bulman’s Roseville, CA, financial advisors or our team of financial advisors in Temecula are here to help you explore all your retirement plan options and determine the best fit for your needs.

Tax-Efficient Investment Strategies

Building an investment portfolio isn’t just about choosing the right assets—it’s also about managing taxes carefully to optimize your returns. Consider these approaches.

Tax-loss harvesting: Selling investments at a loss can offset capital gains, potentially lowering your taxable income. Unused losses can often be carried forward to future tax years.

Tax diversification: Holding a mix of taxable, tax-deferred, and tax-free accounts can provide flexibility when deciding how to withdraw funds in retirement.

Asset location: Placing less tax-efficient investments in tax-deferred accounts and tax-efficient ones in taxable accounts can help reduce yearly taxes.

Municipal bonds: California-issued muni bonds may offer tax-free interest federally and at the state level. Tax-exempt muni bond money markets can generate income without raising taxable income.

Bulman advisors can review your portfolio and suggest ways to improve tax efficiency based on your personal goals.

Estate and Legacy Planning

Planning the distribution of assets after one’s death is not a topic most people enjoy contemplating. However, life’s unpredictability makes addressing this with thoughtful preparation necessary. Estate planning not only honors your wishes but may also offer tax benefits.

California has no state inheritance tax, but federal estate taxes may apply. Without congressional action, estate tax exemptions are set to decrease in 2026, potentially affecting larger estates.

Key considerations:

• Trusts: Tools like revocable living trusts can help avoid probate and manage tax implications.

• Beneficiary designations: Regularly review these to confirm they match your current intentions.

• Legacy planning: Strategies like charitable giving through Donor-Advised Funds (DAFs) or using life insurance can help lower taxable estates while supporting causes you value.

• Long-term care planning in California: With rising nursing and home care costs, early planning through insurance, hybrid policies, or savings can help you prepare.

Bulman Wealth Group focuses on wealth management and legacy planning, working with you to develop plans that reflect your financial goals and personal values.

Why Work With a Financial Advisor in California

Navigating the complexities of investing, rising healthcare expenses, and estate considerations can be overwhelming. Partnering with a knowledgeable financial advisor can provide guidance tailored to your individual circumstances.

Here’s how a Bulman advisor can help:

• Developing a personalized retirement plan: Crafted around your goals, income needs, and comfort with risk.

• Managing tax-advantaged accounts: Helping you make the most of IRAs, 401(k)s, Roth accounts, and catch-up contributions to improve tax efficiency.

• Updating estate planning documents: Keeping plans current to reflect changes in family dynamics or tax laws.

• Reviewing tax-efficient investments: Evaluating asset location and withdrawal strategies to help manage your tax burden.

Consider Bulman Wealth Group for Your Retirement Planning in California

Proactive tax planning is vital for keeping your finances on track. Taking steps now can help you retain more of your hard-earned savings and prepare for a better retirement.

At Bulman Wealth Group, our team is committed to providing personalized strategies that suit your needs. Whether you’re focused on retirement tax benefits in California, managing investments, or planning your legacy, we’re here to help you move forward with more clarity and purpose.

Contact us today for a no-obligation consultation, and let us assist you in building the financial confidence California pre-retirees like you deserve.