February PIT withholding came in $1.2 billion (16 percent) above projections included in the 2024-25 Governor's Budget. Several one-time factors make interpreting the month-to-month change difficult, including a $600 million collection on leap day and an added $500 million from stock equity compensation withholding at several technology companies. An apples-to-apples comparison to the same period last year, which should help account for leap day, suggests underlying withholding growth of about 3 percent above 2023.
In the first few weeks of January, real-time personal income tax (PIT) revenue collections are running $3 billion to $4 billion short of the January target for current year revenue projections included in the 2024-25 Governor's Budget.
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.
August state income tax withholding was down $450 million (6.1 percent) compared to last year.
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 were $90 million (1 percent) lower in July compared to last year.
California income tax collections were down 2 percent in June relative to last year.
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.
Through the first two months of the 2021-22 fiscal year, collections from the state’s three largest taxes are running 20 percent ($3.6 billion) ahead of budget projections.
California income tax withholding remained very strong in August, coming in nearly 20 percent above August 2020.
California income tax withholding continues to surge, as June collections to date are nearly 25 percent above last June.
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.