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 Governor's Budget Projections. Monthly PIT withholding for April came in $54 million (1 percent) above projections included in 2024-25 Governor's Budget. Overall, PIT withholding is running 1 percent above projections included in the 2024-25 Governor's Budget and 5 percent above last 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: Year-Over-Year Improvements Likely to Wane. The figure below shows percent change in monthly income tax withholding compared to the same month of the prior year. February and March withholding came in well above prior year levels, but April only slightly exceeded prior year amounts. This is due, in part, to strong April, May, and June withholding last year. As a result of those strong months, year over year growth in monthly withholding is likely to be minimal for the rest of the fiscal year.