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 December came in $1.5 billion (16 percent) above projections included in 2024-25 Budget Act. Most of this difference is due to a timing issue in which Thanksgiving season withholding was remitted in December, rather than late November, due to an unusually late Thanksgiving holiday. For the fiscal year overall, withholding is running about 3 percent ahead of budget act projections, which targeted 5 percent growth over the prior year.
PIT Withholding Collections Continue Solid Stretch. The figure below shows the latest monthly trends for income tax withholding. Each bar represents a snapshot of how income tax withholding for the prior 12 months compares to the year before. This viewpoint helps filter out some of the month-to-month variation in income tax withholding that makes interpreting trends difficult. So far this fiscal year, the trailing 12-month total of income tax withholding has been trending up between 6 percent and 9 percent.
End-of-Year Withholding Growth of 8 Percent Consistent With Recent Strong Trends. Tracking end-of-year withholding trends is complicated by timing issues, including when Thanksgiving falls and how much end-of-year withholding the state receives after January 1st. Total end-of-year withholding, as best as we can tell, was $1.5 billion (8 percent) higher than the prior year. This covers the period November 1st through early January.