How is California taxable income calculated? (Adjustments due to differences in tax law between federal and state are either added to or subtracted from federal adjusted gross income.)
1.
Subtract income that was taxed under federal law, but not taxed by California.
2.
Add income not taxed under federal law, but which is taxed by California.
3.
Make similar additions or subtractions to account for differences in federal and California “adjustments to income” to determine California adjusted gross income.
4.
If itemizing, make adjustments to federal itemized deductions to determine allowable California itemized deductions.
5.
Determine if the California itemized deductions or standard deduction is more advantageous.
6.
Subtract the deduction to arrive at California taxable income.