California's technology companies, including giants like Apple, Google, Nvidia, and Meta, are some of the most valuable companies in the world and support thousands of high-paying jobs in the state. Many employees at these companies receive equity pay, such as stock options, as part of their compensation. State income tax withholding on this equity pay has grown notably, reaching 6 percent in the last few years. The recent jump in these companies' stock prices, which affects withholding on equity pay, has bolstered otherwise weak income tax withholding during 2023.
Although October colletions from the state's “big three” tax revenues—personal income, corporation, and sales taxes—came in far ahead of Budget Act assumptions, this is not indicative of better than expected revenue performance for 2022-23 overall. Instead, a closer look at the data shows that the recent trend of revenue weakness continued in October.
New IRS data on taxpayer migration during the first year of the pandemic shows an uptick of movement between California and other states, as well as within California.
California income tax withholding collections in November were up nearly a third over last November.
California income tax withholding in October was up 8.2 percent over October 2020, a slower growth rate than in the three previous months.
The California income tax withholding surge continues, as September collections to date are 23.5 percent above last September.
California income tax withholding remained very strong in August, coming in nearly 20 percent above August 2020.
The state's surprisingly strong growth in income tax withholding has been led by high-tech sectors, but many other sectors are showing big gains as well.