The California income tax withholding surge continues, as September collections to date are 23.5 percent above last September.
Based on the most recent revenue and economic data, we currently project that there is a strong chance that collections from the state’s “big three” taxes will exceed the budget act assumption of $170 billion in 2021-22.
New, unanticipated state revenues do not result in a dollar-for-dollar increase in the state’s surplus. Instead, on average, and additional $1 of unanticipated revenues can result in about $0.40 of additional surplus, as a result of the state’s constitutional requirements to allocate revenues to specific uses.
California income tax withholding remained very strong in August, coming in nearly 20 percent above August 2020.