Starting with tax year 2025, California lets you exclude $20,000 of military retired pay from your state taxable income. You can claim it on returns filed after 1 January 2026 and before 1 January 2030. You only qualify if your income is $125,000 or less filing single or head of household, or $250,000 or less filing jointly.
There is nothing to apply for. Claim the exclusion on your California income tax return for the year.
Your Form 1099-R showing the retired pay, kept with your tax records.
