California is one of the most expensive states in the country—not just for living costs, but for taxes too. Income taxes, property taxes, and capital gains can take a big bite out of your wealth. If you’re not careful, high taxes can reduce the assets you’ve worked so hard to build.
I’m David Kassir from Manna Wealth Management. I help clients in Los Angeles and across California protect their wealth and plan for the future. Here’s how you can take steps to keep more of what you earn.
Understand the Tax Landscape in California
California has some of the highest income taxes in the country. The top rate is over 13% for high earners. Capital gains are taxed as regular income. Property taxes are based on assessed values, plus voter-approved local taxes.
Even sales taxes and other fees add up. If you own a business, estate, or investment properties, taxes can significantly reduce your net worth. Understanding where your money goes is the first step in protecting it.
Step 1: Plan Your Income
Your income sources affect your taxes. Retirement accounts, investments, business income, and wages all have different tax rules.
- 401(k)s and traditional IRAs: Taxes are deferred until withdrawal, but California taxes distributions as income.
- Roth IRAs: Qualified withdrawals are tax-free, including in California.
- Investment accounts: Capital gains are taxed at your income rate.
- Business income: Depending on the structure, your business may face high state taxes.
A strategic plan considers where your money comes from and how it is taxed. At Manna Wealth Management, we help clients structure income in a way that reduces unnecessary tax exposure.
Step 2: Use Tax-Efficient Investments
Investments can be structured to reduce taxes. Municipal bonds, for example, are often tax-free at the federal and state level. Index funds and ETFs can reduce taxable events compared to actively managed funds.
Long-term capital gains are taxed more favorably than short-term gains, so holding investments longer can help. Proper planning also considers timing withdrawals to minimize your taxable income.
Step 3: Consider Asset Protection Strategies
California law allows for certain protections. Trusts can shield assets from probate and, in some cases, reduce estate taxes. Proper titling and beneficiary designations ensure assets pass according to your wishes.
Insurance is also an important tool. Umbrella liability policies, long-term care insurance, and life insurance can protect your wealth from unexpected costs.
At Manna Wealth Management, we work with clients to create strategies tailored to their specific situation, ensuring maximum protection under the law.
Step 4: Plan for Estate and Inheritance Taxes
California does not currently have a state estate tax, but federal estate taxes still apply to large estates. Proper estate planning ensures your heirs receive your assets efficiently.
Tools like revocable and irrevocable trusts, gifting strategies, and charitable planning can reduce taxable exposure. A clear estate plan also prevents your family from facing delays and unnecessary costs after your passing.
Step 5: Reduce Property Tax Exposure
Property taxes in California are capped by Proposition 13, but reassessments can still increase your tax bill. Planning for property ownership and understanding exclusions for transfers between family members can help limit tax increases.
Investment in lower-tax jurisdictions or careful planning around inheritance can also reduce property tax burdens.
Step 6: Take Advantage of Retirement Account Strategies
Retirement accounts are powerful tools for tax planning. Combining Roth and traditional accounts provides flexibility. You can withdraw from Roth accounts tax-free while using traditional accounts strategically to manage income levels.
Coordination with Social Security, pensions, and other income sources ensures your overall tax exposure is minimized. At Manna Wealth Management, we help clients create a tax-efficient retirement withdrawal strategy.
Step 7: Timing Is Critical
Taxes depend on timing. Selling investments in a high-income year can increase your tax bill. Spreading income over multiple years, deferring bonuses, or planning withdrawals carefully can reduce taxes significantly.
Timing also applies to charitable giving and business decisions. Small adjustments in timing can save thousands of dollars over time.
Step 8: Charitable Giving and Tax Deductions
Charitable contributions can reduce taxable income while supporting causes you care about. Donor-advised funds allow you to control when donations are made and maximize tax benefits.
Other deductions, like mortgage interest, medical expenses, and state taxes (subject to federal caps), can also reduce liability. A structured approach ensures you capture every available deduction.
Step 9: Consider Professional Guidance
California’s tax system is complex. Missteps can be costly. Working with a financial advisor like David Kassir at Manna Wealth Management gives you clarity. He can review your income, investments, and estate plan to identify opportunities for tax reduction.
Professional guidance ensures your strategies are legal, effective, and tailored to your specific goals.
Step 10: Regular Review and Adjustment
Tax laws change, personal circumstances change, and financial markets change. A strategy that works today may not be optimal in five years. Reviewing your plan annually helps you adapt and stay ahead of potential tax liabilities.
At Manna Wealth Management, we regularly check client plans to ensure they remain efficient under evolving tax laws.
Step 11: Protect Business Assets
If you own a business in California, taxes can take a large portion of your earnings. Structuring your business as an S-corporation, LLC, or other entity can reduce taxable income.
Deferring income, reinvesting profits, and taking advantage of deductions are all strategies that protect your business wealth. Careful planning avoids paying more than necessary.
Step 12: Understand California’s Hidden Taxes
California also has other fees that reduce wealth: sales tax, gas tax, licensing fees, and more. For investors, taxes on dividends and capital gains can accumulate.
Planning for all types of taxes—not just the obvious ones—protects your net worth. Awareness is the first step to taking control.
Step 13: Avoid Costly Mistakes
Common mistakes in California include:
- Selling investments without considering tax impact
- Ignoring timing of withdrawals from retirement accounts
- Failing to update estate plans
- Overlooking deductions or credits
- Holding cash that loses value to inflation
Proper planning prevents these mistakes. Small errors can cost tens or hundreds of thousands over time.
Step 14: Think Long-Term
Protecting assets is not just about saving taxes this year. It’s about maintaining wealth for the next decade, your retirement, and your heirs. Long-term planning ensures that growth, risk management, and taxes are all balanced effectively.
At Manna Wealth Management, we focus on long-term strategies that protect wealth while allowing it to grow safely.
Step 15: Take Action Today
Waiting to plan exposes your assets to unnecessary risk. The earlier you start, the more options you have to reduce taxes and protect wealth. Even if you start later in life, professional guidance can make a significant difference.
Working with David Kassir at Manna Wealth Management ensures your strategies are realistic, actionable, and designed to protect your wealth from California’s high taxes.
Final Thoughts
California’s high taxes can take a large portion of your income, investments, and estate if you don’t plan. The good news is that strategies exist to protect your assets.
Key steps include:
- Structuring income and investments efficiently
- Using retirement accounts wisely
- Implementing trusts and estate planning
- Timing income, investments, and withdrawals strategically
- Reviewing plans regularly
These strategies help you keep more of what you earn and ensure your wealth lasts. Protecting assets in California is complex, but with the right plan, it’s manageable.
Professional guidance from David Kassir at Manna Wealth Management can give you confidence. You’ll know your options, your risks, and the steps to protect your wealth. Your assets are valuable. Protecting them ensures your financial security now and for future generations.
