As a geriatric millennial, it finally feels like I am over the steep hill on the way to retirement. While it may still be a slow trek, a day when I don’t have to clock in to my 9 to 5 is within sight. As a California resident, I know that retiring in the state may be pricey, so I asked ChatGPT how much I’d pay in taxes if I retired here. Below is what the artificial intelligence (AI) chatbot said.
Also here’s when ChatGPT said you can retire — you won’t believe the answer.
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No Tax on Social Security
First, ChatGPT noted that California does not tax Social Security benefits. This includes survivor, disability and Tier 1 Railroad benefits. According to Forbes, the AI assistant is right. California, despite being known as a high-tax state, does not tax Social Security retirement benefits. In 2025, a 70-year-old person can get a max of $5,108 all tax-free.
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Taxes on Retirement Distributions
While California won’t tax social security benefits for a retiree, the state does tax distributions from other retirement accounts, including IRAs, 401(k) plans and pensions, as explained by ChatGPT. What’s worse is if funds are taken out of the account before the age of 59 and a half. The chatbot said I could face a 2.5% state penalty (and 10% federal penalty) or more, depending on the type of account. California’s Franchise Tax Board confirmed the tax on early distributions.
A notable exception is a Roth IRA, which is funded with income that has already been taxed. A Roth IRA grows tax-free, but there are limitations on who can contribute to a Roth.
Same Tax Rate for Capital Gains
Retiring in California means that I will also be subject to taxes on capital gains. The state does not distinguish between short- and long-term capital gains, as explained by ChatGPT. According to the Franchise Tax Board, California does not have a lower rate for capital gains, treating them all as ordinary income.
Some states, like Alaska, Florida, Nevada and Texas, do not tax capital gains, as reported by SmartAsset. Many of these states, however, also do not have state income tax.
Overall Tax Rates in California
ChatGPT noted that the state’s income tax is progressive, ranging from 1 to 13.3% depending on income. It said that a person would be taxed 1% on roughly the first $9,300 and up to 13.3% if they made over $1 million.
While the AI chatbot correctly assessed the rates a person would pay, the income varied slightly for 2025. AARP reported that the 1% tax rate applies to income up to $10,756. The senior non-profit agency also noted that individuals making over $1 million may pay an additional 1 percent income tax.
Tax Benefits for Seniors
As a senior, ChatGPT suggested that I may qualify for additional benefits in the Golden State, including a “Senior Head of Household” credit of up to $1,748 if I am over the age of 65 with an income under $92,719 and file as Head of Household. Additionally, the chatbot mentioned that retirees over 65 may be eligible for a pension income exclusion.
A review of the Franchise Tax Board confirms the Senior Head of Household credit; however, it explained that you can claim up to $1,806 and must have an income of less than $95,779. For other potential benefits, current or hopeful retirees should consult with an experienced tax professional.
Other Tax Considerations
ChatGPT noted that while property taxes are low in the state, around 0.68%, they can be challenging due to high home values. California lawmakers, however, have taken steps to protect homeowners, including passing Proposition 13, which caps property tax increases at 2% each year and Proposition 19, which allows some seniors to carry over a lower tax base to help purchase a home. ChatGPT also said that there is no estate or inheritance tax in the state.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT How Much I’d Pay in Taxes If I Retired in California: Here’s What It Said
