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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Is it true that the State of California will increase the withholding

Resolved Question:

Is it true that the State of California will increase the withholding rates by 10% to help pay down the state deficit. please help. I'm paniquin because somebody told me that was going to be about $200 from every paycheck. My gross monthly is $3,068.00. how much with the state will take?
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

Your withholding depends on how you filed W-4 and DE-4 forms.

Assuming you are single and claimed two allowanced on W-4 and DE-4 forms - your monthly paycheck should be:

Monthly Gross $3,068.00
Federal $265.78
Social Security $190.22
Medicare $44.49
California $77.02
CA SDI $33.75
Net Pay $2,456.74


Yes - that is true - under ABX4-17, starting Nov 1, 2009, there will be new state income tax withholding table to increase by 10% the amount of income taxes withheld.

For stock options and bonus payments - the withholding rate increases from 9.3% to 10.23%.


So - considering the example above - you may expect California withholding to increase from $77.02 to $84.72 - so that will be not such large impact as somebody told you...

In additional to that - under ABX4-18X starting Jan 1, 2010, there will be 7% California backup withholding for certain payments to non-employees (i.e. independent contractors) where back-up withholding is otherwise generally required under the Internal Revenue Code.

Please be aware - that actual tax rates are not changed - in case withholding is more than your actual tax obligations - at the tax time you will get larger refund.


Let me know if you need any clarification.

Here is an ARTICLE with more details

Edited by LEV on 10/2/2009 at 12:54 AM EST
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