California employers make regular income tax withholding payments for their employees. These amounts are reported every weekday, providing a real-time indication of the direction and magnitude of aggregate change in the employers’ payroll. Most withholding payments are for employees’ wages and salaries, but withholding is also due on bonuses and stock options received by employees. Withholding on stock options has made up a growing share of collections in recent years.
February Withholding Came in Near Recent Budget Projections and Up Slightly From Last Year. Monthly personal income tax (PIT) withholding for February totaled $9.1 billion, about $180 million (2 percent) above projections included in Governor's Budget. February withholding was about 4 percent higher than its level in February of last year.
Despite Some Deceleration, Withholding Remains a Revenue Bright Spot. The figure below shows recent monthly trends for income tax withholding. Each bar represents a snapshot of how total income tax withholding for the prior 12 months compares to the same period one year before. This perspective helps filter out some of the month-to-month volatility in withholding that can make underyling trends difficult to interpret. The trailing 12-month total of income tax withholding had been hoving near 10 percent growth but has decelerated to roughly 7 percent in January and February. Zooming in at the recent deceleration more closely, 3-month total withholding for December, January, and February is up just 3.3 percent from the same period one year earlier.