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.
June Withholding Came in Below Monthly Estimate, But Fiscal Year Ended Above May Revision Tally. Monthly personal income tax withholding for June totaled $8.5 billion, about $430 million (5 percent) below projections included in the May Revision. June withholding was about 6 percent higher than its level in June of last year. Withholding was running well above the May Revision estimates through mid-June before stalling somewhat across the back half of June. For the fiscal year total, withholding came in roughly $800 million (1 percent) above the May Revision estimates
Underlying Trend Remains Strong, Though Pace Seems to Be Downshifting. 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 underlying trends difficult to interpret. The trailing 12-month total eased to roughly 8.5 percent in June, down from 8.9 percent in May. The 3-month total (a better, but noisy guage of more recent trends) for April, May, and June is up about 11 percent from the same period one year earlier. This reflects a slight slowdown from 13 percent in May's reading.