“Last year (2010) I took an early distribution from my IRA. Do I have to pay taxes on the distribution in California?”---> Yes, I think so.Generally speaking, IRA distributions are taxable on a federal and state level, and distributions before retirement age may subject you to additional penalties. The additional tax on an early distribution is 10% of the taxable amount. The taxable amount is also included in your taxable income. To discourage the use of IRAs for purposes other than retirement, the law imposes a 10% additional tax on early distributions from traditional and Roth IRAs unless an exception applies. Generally, early distributions are those you receive from an IRA before reaching age 59 1/2. The 10% additional tax applies to the part of the distribution that you have to include in gross income.