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PERSONAL INCOME TAX RATES AND EMPLOYER WITHHOLDING

PURPOSE OF BULLETIN

To inform staff that California income tax rates will increase by .25 percent, for tax years beginning on or after January 1, 2009 and before January 1, 2011, due to ABX3 3, amending R&TC ยง17041.

BACKGROUND

Withholding tables determined by us and distributed by the Employment Development Department (EDD) did not include the 2009 increased rates. New withholding tables are being developed and will be distributed to employers by EDD.

As a result, taxpayers may be under withheld from January 1, 2009 until the time new tables are distributed to employers.

The under withholding may result in some taxpayers owing a larger amount of tax or receiving a smaller refund than expected when they file their 2009 return.

Taxpayers that are under withheld will not be assessed an underpayment of estimated tax or underpayment of tax penalty to the extent that underpayment was created or increased by the change in the tax rate.

NEW RATES

New rates will be 1.25%, 2.25%, 4.25%, 6.25%, 8.25%, and 9.55%. To view the new tables, visit:

http://www.edd.ca.gov/Payroll_Taxes/Rates_and_Withholding.htm

 

Back to Public Service Bulletins - 2009