Important Changes to your California Tax Withholding

Timely. Just got this email from our payroll manager at work.

As a result of recent California legislation (CA Assembly Bill x4 17), California’s Employment Development Department has released new tax withholding tables, which are effective from November 1st through December 31st, 2009, and require employers to increase the amount of state income tax withheld from employee paychecks by 10%. For example, if you currently have CA taxes withheld at $100 per paycheck, it will be increased to $110.

The legislation also increases withholding rates for supplemental wages paid from November 1, 2009 through December 31, 2009 as follows:

- Increase from 9.3% to 10.23% for compensation related to bonuses, restricted stock units and stock options.

- Increase from 6.0% to 6.6% for other supplemental wages (such as overtime pay, commissions, sales awards, and vacation payout).

California has not yet released new tax withholding schedules for 2010.