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.
December Withholding Came In Much Stronger Than Budget Projections, In Part Because Projections Had Assumed Year-Over-Year Drop. Monthly personal income tax (PIT) withholding for December came in $1.5 billion (15 percent) above projections included in 2025-26 budget agreement. Because budget projections for the month anticipated a year-over-year decline in withholding, withholding growth over the prior year was somewhat smaller (9 percent) though still robust.
Despite Decelleration in October and November, Withholding Persists as a Revenue Bright Spot. The figure below shows the latest 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 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 hoving near 10 percent growth. Despite relatively slower growth over the Thanksgiving period, withholding remains nearly 9 percent higher for the fiscal year so far compared to last year.