California Retirees Keep $89,370 From $2 Million Dividend Portfolio as State Taxes Cut $4,000
Updated
Updated · 24/7 Wall St. · Jun 15
California Retirees Keep $89,370 From $2 Million Dividend Portfolio as State Taxes Cut $4,000
1 articles · Updated · 24/7 Wall St. · Jun 15
Summary
$95,500 in gross annual income from a $2 million dividend portfolio falls to about $89,370 in spendable cash for a retired California couple after federal and state taxes.
The sample mix—60% dividend-growth stocks, 25% covered-call funds and 15% REITs—produces a 4.8% blended yield, but only $42,000 is qualified-dividend income while $53,500 is taxed as ordinary income.
Federal tax stays relatively light at about $2,130 because the standard deduction cuts taxable ordinary income to roughly $21,300 and the qualified dividends remain in the 0% federal band.
California taxes dividends as ordinary income, pushing the state bill toward $4,000; the same portfolio in Florida, Texas, Nevada or Tennessee would leave about $93,370 to spend.
The portfolio also stays below the 2026 joint-filer IRMAA threshold of $218,000, avoiding Medicare surcharges, while the report argues retirees can raise after-tax income by holding REITs and covered-call funds in IRAs.