Are any types of investment income non-taxable?

Yes, certain types of investment income may be non-taxable in California. Generally, any income derived from investments such as stocks, bonds, mutual funds, annuities, and other similar investments falls under the umbrella of taxable income, but there are exceptions. Investment income from U.S. government bonds is generally free from federal and state income taxes. Furthermore, if you are eligible for a special tax exemption, certain types of income may be non-taxable. For example, if you are enrolled in a qualified retirement plan such as a 401(k) or IRA, any income derived from investments in these plans may be excluded from your taxable income. In addition, if you are a student or are living below a certain income level, you may be eligible for tax-exempt interest earned on certain investments. Other types of non-taxable income in California may include life insurance proceeds, gifts, inheritances, Social Security income, and gambling winnings. Finally, some investments are not taxable under federal law, but may be taxable at the state level. For example, certain interest income derived from municipal bonds may be exempt from federal taxes, but may be subject to taxation by California. It is important to check with a tax advisor or to read the fine print of any investment you are considering so that you are familiar with the tax implications of any income you may earn.

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Are any types of investment income non-taxable?

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