November 1, 2023
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.
Monthly Witholding Compared to Budget Act Projections. Monthly PIT withholding for October came in $152 million (2 percent) above projections included in 2023-24 Budget Act. For the fiscal year so far, withholding is running about even with the Budget Act projections.
PIT Withholding Appears to Have Leveled Off Since Downturn Last Fall. Year over year changes in monthly tax withholding have leveled off in recent months following volatility 2021 and 2022. During 2021, monthly withholding was up more than 25 percent (above prior year) before declining last fall and winter. For the second month in a row, the 6-month rolling average of the annual change in withholding remained at 3 percent in October. (We look to the 6-month average because monthly changes in withholding can be noisy due to collection day timing differences.)