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.
Compared to Recent Projections. Monthly PIT withholding for June came in $607 million (7 percent) below projections included in 2024-25 Governor's May Revision. June's weaker-than-projected withholding should be interpreted alongside May totals, which were $1.1 billion above projections. Taken together, May and June withholding came in 4 percent above budget projections. For the fiscal year overall, 2023-24 PIT withholding came in about 5 percent higher than the prior year.
Broad Trend: PIT Withholding Has Regained Ground Since Late 2022. Total personal income tax withholding declined sharply during the second half of 2022 and early 2023, as shown in the figure below. Due in part to stock price increases at California's biggest technology companies (as we discussed in this post), withholding regained some ground beginning in mid-2023.
Recent Trends: Looking Past Timing Issues, Fiscal Year Ended on a Strong Note. The figure below shows percent change in monthly income tax withholding compared to the same month of the prior year. May 2024 withholding came in $1.5 billion (22 percent) above the prior year, but the recently released June totals were slightly below last year. This suggests that timing of collections across the two months played some role in May's strong figures and June's weaker figures. Taken together, though, May and June came in 4 percent above budget projections and about 6 percent above the prior year.