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 October came in $654 million (8.2 percent) above projections included in 2024-25 Budget Act. For the fiscal year overall, 2024-25 PIT withholding is running about 2 percent above budget act projections, which targeted 5 percent growth over 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 and has been on solid footing since then.
Recent Trends: PIT Withholding Collections Continue Solid Stretch. The figure below shows percent change in monthly income tax withholding compared to the same month of the prior year. Although timing issues exaggerated the month-to-month change figures (shown in grey), monthly withholding collections have grown at an annualized rate of 9 percent over the past six months (shown in green).