'Kroger employees evaluating retirement in high-cost states like California should take a coordinated view of income timing, estate structure, and long-term living expenses, recognizing how these factors interact over time and discussing their approach with a qualified professional for guidance specific to their situation.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'Kroger employees planning for retirement in states like California should carefully align income distribution decisions, estate considerations, and cost-of-living realities within a broader strategy, while working with a qualified professional to evaluate how these elements fit their individual circumstances.' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

(1) how California’s tax structure may affect retirement income planning for Kroger employees,

(2) key estate planning considerations, including community property and cost basis adjustments, and

(3) how state tax rules and cost of living can influence long-term retirement decisions.

California Retirement Planning: The Evidence

As many Kroger employees know, California is one of the most costly states in the U.S. to live in due to high income taxes, steep home prices, and an overall expensive cost of living.

According to the Tax Foundation, California has one of the highest top marginal income tax rates in the United States. ¹  Instead of imposing a single, flat tax rate on all taxpayers, California uses a progressive tax system, which means that tax rates rise according to income levels.

While these elements frequently influence people's perceptions of California during their working years, they may also exert an impact on long-term financial and estate planning decisions. As Kroger employees approach retirement, these are variables they may want to take into account.

Retirement and Income Taxes

Due to California's graduated income tax system, an individual's taxable income determines how much tax they must pay. This structure applies both during working years and after retirement.

Because of this approach, Kroger retirees may want to consider how their income is recognized over time. For instance, when planning retirement fund withdrawals, it may be possible to mitigate taxes owing depending on when the money is withdrawn and which souces it comes from. The IRS outlines how distributions from retirement accounts are taxed depending on timing and account type.

The Increase in Community Property and Cost Basis

Beyond the income tax rules, community property laws are another important estate planning factor for married couples in California, including Kroger employees reviewing how their assets are structured.

In community-property states like California, shared assets are subject to a step-up adjustment to their fair market value upon the death of the first spouse. ²  This generally applies to assets such as real estate, stock, business interests, and even collectibles. ²

This matters because the cost basis of an asset determines how much tax is owed when that asset is sold. If a beneficiary inherits an asset at its original cost basis (without a step-up adjustment), they would potentially owe taxes on the difference between the original price and the current price—which can be considerable if the value of the asset has gone up over time. With a step-up in the asset's cost basis, however, the capital gains owing on the sale of the asset may be lower.

When preparing for the transfer of valuable assets, Kroger employees should consider the implications of these rules when crafting long-term estate strategies.

No Inheritance or Estate Taxes from the State

There is no state inheritance or estate tax in California, which is an important consideration for Kroger employees reviewing estate transfer outcomes. ³

In other words, at the state level:

- When assets are transferred after death, there is no estate tax.

- Beneficiaries are not subject to inheritance taxes.

Estates beyond the federal exemption threshold, however, may still be subject to federal estate taxes, as outlined by the IRS.

Considerations for Planning

Even though there isn't an estate or inheritance tax in California, estate planning can still involve multiple layers, such as federal tax considerations, asset ownership arrangements, and the title or transfer of assets for Kroger employees.

The timing, ownership, and distribution of assets can influence how taxes are applied and how effectively assets are transferred to beneficiaries, which remains an important planning consideration for Kroger employees.

The Final Score

In many ways, California remains an expensive, high-tax state, especially throughout the working years. Long-term planning should take into account the potential for basis adjustments on eligible assets and the absence of a state estate or inheritance tax for Kroger employees.

Kroger employees preparing for retirement may make more informed financial decisions when they understand how capital gains, income taxes, and estate planning rules interact.

Collaborate with a Financial Professional

There are many moving components in retirement and estate planning, and every circumstance is different for Kroger employees. You can evaluate how these rules apply to your personal situation by consulting with a qualified financial professional.

The Retirement Group can assist you in organizing your retirement plan, including estate planning, investment choices, and tax considerations. You can reach a representative by calling (800) 900-5867.

Closing that savings gap starts with fully understanding what Kroger already contributes on your behalf. When you're weighing retirement planning, the specifics of your employer's retirement plan change the math in ways that generic advice can't capture.

Kroger provides a 401(k) with a match of 100% on the first 3% contributed plus 50% on the next 2%, for a maximum match of 4%. Some eligible employees also receive a company automatic contribution of 1-2% of pay and may participate in the UFCW Consolidated Pension Plan. When you factor in healthcare, the math gets more personal. How you use your health plan options today, whether you're contributing to an HSA, and how medical costs will be covered between your last day at Kroger and Medicare eligibility at 65 all belong in the same retirement analysis.

Coordinating Kroger's retirement benefits with your other accounts and income timing is where a personalized plan pays for itself. For retirement planning, the specifics of your situation should drive the decision, not general guidelines.

Sources:

1. Tax Foundation. ' Taxes In California .' 2026.

2. Law Offices of James Burns. ' Trusts and the step-up in basis: What you really need to know in California ,' by James Burns. June 25, 2025.

3. California State Controller’s Office. “California Estate Tax.” State of California,  https://www.sco.ca.gov/ardtax_estate_tax.html.  

California Franchise Tax Board.  2025 Tax Rate Schedules . State of California, 2025, https://www.ftb.ca.gov/forms/2025/2025-540-tax-rate-schedules.pdf.

Taylor, Mac.  California’s High Housing Costs: Causes and Consequences . Legislative Analyst’s Office, 17 Mar. 2015,
https://lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.pdf.

Internal Revenue Service.  Publication 559: Survivors, Executors, and Administrators . U.S. Department of the Treasury, 2025,
https://www.irs.gov/pub/irs-pdf/p559.pdf.