The 5 Biggest Tax Breaks for California Residents: A Guide to Saving on State Income Taxes

California State Tax Breaks 2023: Top 5 Deductions and Credits

Are you ready to file your California state income taxes? Check out this article to learn about the top 5 tax breaks and credits available for California residents.

1. Traditional IRA deduction

• Key Benefit: Reduce taxable income for both federal and state taxes.
• California follows federal rules for tax-deductible contributions to a traditional IRA.

2. California standard deduction

• Difference: Lower than the IRS standard deduction.
• If you're a single taxpayer in California, taking the standard deduction might increase your taxable income.

3. Deductible home mortgage interest and healthcare expenses

• Extra Benefit: Deduct a larger amount of home mortgage interest in California than the IRS allows.
• California also offers tax deductions for medical and dental expenses exceeding 7.5% of your AGI.

4. California tax deductions not allowed on federal taxes

• Specific Deductions: Personal casualty and theft losses, moving expenses, some employee expenses, and miscellaneous deductions.
• California provides these deductions that are not available at the federal level.

5. Unique California state tax credits

• Special Credits: California Child and Dependent Care Expenses Credit, Nonrefundable renter's credit, Senior head of household credit.
• Explore the various tax credits offered by California for different life stages.

Make sure you take advantage of these California tax breaks to maximize your savings on state income taxes.