California Code of Regulations
Title 18 - Public Revenues
Division 2.5 - State Controller
Chapter 1 - Inheritance Tax
Article 5.3 - Pension Exemption
Section 13880 - Pension Exclusion

Public retirement system pensions, retirement allowances, optional benefits and other rights and the right of any person, whether the decedent or not, are exempt from the tax imposed by the Inheritance Tax Law. "Public retirement system" includes United States federal and other states of the United States, but does not include persons not directly employed by such government. "Pensions, retirement allowances and optional benefits" shall include amounts contributed by the employee to public retirement systems, plus the increase and earnings of such contributions.

NOTE: Reference 13880, Revenue and Taxation Code.