California is a great place to live and build wealth, but it’s no secret that the state also has some of the highest taxes in the country. For professionals, business owners, and retirees in California, smart tax planning can make a big difference in how much of your wealth you keep.
As David D. Kassir, Senior Financial Advisor at Manna Wealth Management, I help families and individuals across California create strategies that reduce tax burdens while aligning with long-term financial goals.
Below are several practical approaches that California residents can use to lower taxes and protect their wealth.
1. Take Advantage of Retirement Accounts
Contributing to retirement accounts is one of the most effective tax strategies.
- 401(k) plans: Contributions reduce your taxable income today. For 2025, you can contribute up to $23,000 (plus $7,500 if you’re 50 or older).
- Traditional IRAs: Allow tax-deferred growth, lowering current taxable income.
- Roth IRAs: Contributions are after-tax, but withdrawals in retirement are tax-free—a great option if you expect higher taxes later.
Example: A Malibu professional earning $200,000 who contributes $20,000 to their 401(k) could save thousands in California state and federal taxes this year.
2. Use Health Savings Accounts (HSAs)
If you have a high-deductible health plan, an HSA is a triple-tax advantage tool:
- Contributions are tax-deductible.
- Investments grow tax-free.
- Withdrawals for qualified medical expenses are tax-free.
Over time, HSAs can also double as an additional retirement account.
3. Consider Municipal Bonds
California municipal bonds can be especially powerful because:
- Interest earned is free from federal taxes.
- Interest is also free from California state taxes if you buy bonds issued within the state.
For high-income earners in Malibu or Los Angeles, tax-free income from municipal bonds can be more valuable than taxable income from other investments.
4. Optimize Capital Gains Strategies
California taxes capital gains as regular income, so planning is key.
- Hold investments longer: Selling after one year qualifies for lower federal long-term capital gains rates (though California still taxes at your income rate).
- Tax-loss harvesting: Selling underperforming investments to offset gains.
- Gifting appreciated assets: Donating stock to charity can eliminate capital gains taxes while providing a deduction.
Example: A California business owner who donates $50,000 of appreciated stock directly to a nonprofit avoids paying capital gains and also receives a charitable deduction.
5. Plan for Real Estate Taxes
California’s high property values often mean large real estate tax bills.
- Consider a 1031 exchange if you’re selling investment property. This allows you to defer capital gains taxes by reinvesting in another property.
- Explore property tax exemptions for seniors, veterans, or inherited property.
For many Malibu families, using real estate strategies can save tens of thousands of dollars in taxes over time.
6. Estate and Gift Tax Planning
While California does not have a state estate tax, federal estate taxes can apply. Smart planning can reduce this burden.
- Annual gift exclusion: You can gift up to $18,000 per person in 2025 without using your lifetime exemption.
- Trusts: Certain trusts can help reduce taxable estates while ensuring wealth passes smoothly to heirs.
Pairing estate planning with tax strategies ensures your legacy is preserved for future generations.
7. Work With a Financial Advisor Who Understands California Taxes
Tax laws in California are complex and change often. Having a financial advisor who understands the state’s unique environment can help you create a tax plan tailored to your goals.
At Manna Wealth Management, I work closely with clients to combine investment planning, retirement strategies, and tax-smart approaches into one coordinated plan. You can learn more about my background in my advisor profile.
Final Thoughts
Keeping more of your wealth in California is about being proactive. Whether it’s maximizing retirement contributions, leveraging municipal bonds, or planning for estate taxes, each strategy can make a meaningful difference over time.
With the right planning, you don’t have to let high taxes hold back your financial future—you can position your wealth to grow, last, and support your family’s goals.
