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.
July Withholding Came in Slightly Below Budget Projections and Up Modestly From Last Year. Monthly personal income tax withholding for July totaled $8.4 billion, about $170 million (2 percent) below budget projections. July withholding was only 3 percent higher than its level in July of last year.
Underlying Growth Trend Eased Slightly. 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 about 8 percent in July. The 3-month total (a closer, but noisy gauge of recent trends) for May, June, and July is up about 6 percent from the same period last year, compared to up 13 percent as of last month. The step down from last month's reading is largely because the 3-month window no longer includes April, which was unusually strong and drove up the 3-month growth rate.