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 personal income tax (PIT) withholding for June came in $465 million (6 percent) above projections included in 2025-26 Budget agreement. This amounts to an 11 percent growth above the prior year level (due to timing issues, June, 2024 had one fewer withholding collection days than June, 2025. Some amount of the overage likely results from this timing issue).
Recent Trend in Withholding Remains Solid by Historical Standards. 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. The trailing 12-month total of income tax withholding had been trending up between 5 percent and 10 percent most of the fiscal year. This growth ticked up to around 10 percent in January. Since then, annual withholding growth for March, April, May, and June have come in at around 9 percent.