California Education Savings Bond Interest Exclusion
California Education Savings Bond Interest Exclusion 2026
California education bond exclusion planning should confirm the bond type, owner age at issue, qualified education expenses, filing status, MAGI phaseout, and Form 8815 calculation. Then check CA tax treatment instead of assuming the state follows the federal exclusion automatically.
Primary taxpayer
California resident or filer evaluating education savings bond interest exclusion
Federal check
Review the IRS deduction or income reporting rule first
State check
California return treatment and 13.3% top state rate
Canonical route
/deduction/education-bond-exclusion/california/
What matters for 2026
- Use this exact state page when the search intent names both the deduction topic and the state.
- Separate the federal deduction, state return treatment, and local filing records before estimating savings.
- Verify the current-year IRS and state source links before taking a filing position.
Next step
Use the main deduction guide for calculator inputs, eligibility checks, related forms, and broader federal rules.
Open the full guidePlanning workflow
- 1Confirm whether the federal itemized, above-the-line, credit, exclusion, or income-reporting rule applies.
- 2Review California filing instructions separately instead of assuming the federal result carries over.
- 3Keep source documents, worksheets, receipts, and return workpapers together for audit support.
- 4Use the linked LevyIO guide for broader calculator inputs, then return to this page for the state-specific checklist.
Records to keep
- Federal form or worksheet tied to the deduction topic
- California return instructions, schedules, or state workpapers
- Receipts, statements, confirmations, or logs supporting the amount
- A short note showing how federal and state calculations differ
Primary sources
2026 savings example for California
Planning estimate for a single filer earning $91,905 (California median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; CA tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$1,565
Federal savings
$1,100
$11,389 → $10,289 · 22% bracket
CA state savings
$465
$4,455 → $3,990 · 9.3% marginal
Combined marginal rate
31.3%
≈ $313 saved per $1,000 deducted
Federal × California marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The CA column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | CA marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 2% | 12% | $120 |
| 12% | $28,500 - $66,500 | 6% | 18% | $180 |
| 22% | $66,500 - $121,800 | 9.3% | 31.3% | $313 |
| 24% | $121,800 - $217,875 | 9.3% | 33.3% | $333 |
| 32% | $217,875 - $272,325 | 9.3% | 41.3% | $413 |
| 35% | $272,325 - $656,700 | 11.3% | 46.3% | $463 |
| 37% | Over $656,700 | 11.3% | 48.3% | $483 |
Eligibility & forms
Taxpayers who cash Series EE or I bonds for qualified education expenses
- Bonds must be Series EE or I issued after 1989
- Owner must be at least 24 when bond was issued
- Used for qualified higher education expenses
- Income phase-outs apply
Federal forms: Form 8815, Form 1040
California filing notes
Maximize tax-deferred contributions. Plan for the additional 1% surcharge over $1M. If leaving California, document your move thoroughly. The FTB aggressively audits departing high-income residents.
Common mistakes: Buying bonds in child's name instead of parent's; Not meeting the age requirement at issuance; Exceeding income limits for the exclusion.
Frequently asked questions
How much can the Education Savings Bond Interest Exclusion save a California taxpayer in 2026?
In LevyIO's example, a single filer with $91,905 of income (the California median household income in our state dataset) who removes $5,000 from taxable income saves about $1,100 in 2026 federal tax (22% marginal bracket) plus about $465 in California tax (9.3% state marginal rate), roughly $1,565 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's CA bracket data, not a survey figure.
What is the California income tax rate for 2026?
California has a progressive income tax with a top rate of 13.3%. The CA standard deduction in LevyIO's dataset is $5,706 single / $11,412 married. Highest state income tax (13.3%). Additional 1% Mental Health Services Tax over $1M. No preferential capital gains rate.
Who qualifies for the Education Savings Bond Interest Exclusion in California?
Taxpayers who cash Series EE or I bonds for qualified education expenses. The federal rules are the same in every state; the requirements are: Bonds must be Series EE or I issued after 1989; Owner must be at least 24 when bond was issued; Used for qualified higher education expenses; Income phase-outs apply. California filers should confirm on the CA return whether the state follows the federal treatment.
Which forms do I file to claim the Education Savings Bond Interest Exclusion?
Federal: Form 8815, Form 1040. California: check the California Franchise Tax Board instructions for the matching state schedule. Common mistakes: Buying bonds in child's name instead of parent's; Not meeting the age requirement at issuance; Exceeding income limits for the exclusion.
Education Savings Bond Interest Exclusion in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.