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California withholding tax increase November 1
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California Governor Arnold Schwarzenegger
AP Photo/Rick Bowmer
AB 17 which was enacted by the California legislature and signed by Governor Schwarzenegger, requires the California Franchise Tax Board to adjust the payroll withholding table with an increase. The payroll withholding tables apply to pensions, as well as wages.
AB 17 will increase payroll withholding by 10 percent, effective for wages paid after October 31, 2009. Withholding on supplemental wages increase from 6 percent to 6.6 percent effective for supplemental wages paid after October 31, 2009 and for stock options and bonus payments it will increase from 9.3 percent to 10.2 percent.
To give you an idea what that will mean to you, as an example, if state income tax withholding is $500 a pay period on November 1, it will be adjusted to $550.00
The law also increases the second quarterly estimated tax payment from 30 to 40 percent and the fourth quarterly installment from 20 to 30 percent.
The AB 17 increases the payroll tax withholding and it does not increase California personal income tax rates.
To help offset the extra money taht will be taken out of your paycheck, you can fill out a DE-4 form increasing your exemptions, for example from single 2 to single 3 and it will not change your federal exemptions, just your state exemptions. The form is available on the EDD website. If you would like to adjust your withholding click here to get the form.
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