The California Payroll Tax is a tax collected from an employee by the employer and then remitted to the state. The payroll tax rate in California can vary depending on how much you make, which means your paycheck will be different every month. This blog post will discuss what you need to know about california payroll tax and give you ideas on how to plan accordingly for your next pay period!

What Is Payroll Tax?

Payroll tax is a levy on employers and employees that helps finance social welfare programs. In the United States, payroll taxes are used to fund Social Security, Medicare, and unemployment insurance. The payroll tax in California is made up of two parts: the employee portion and the employer portion. The employee portion is deducted from employees’ paychecks, while employers pay the employer portion. Both the employee and employer portions are based on wages earned, limiting how much can be taxed. For 2018, the employee portion is set at 0.275% of salary, while the employer portion is set at 0.22%.

 

What Are the Exemptions for California’s Payroll Taxes?

There are also exemptions to the payroll tax. For example, income from self-employment is not subject to payroll taxes. Additionally, certain types of income (e.g., pensions, annuities, interest) are exempt from the state payroll tax. In this case, your employer will not withhold any taxes from those types of income and you must pay them yourself as part of your annual filing with the California Franchise Tax Board (FTB).

There are other exemptions, so be sure to check the complete list on the FTB website. If you have any questions about whether a particular type of income is subject to payroll taxes, contact the FTB.

If you’re an employee in California, your employer will withhold state and federal payroll taxes from your paycheck. These taxes help fund programs like Social Security and Medicare. However, not all income is subject to payroll taxes. There are several exemptions, which the California Franchise Tax Board (FTB) outlines on their website. If you’re an employer in California, it’s essential to understand your obligations to pay state and federal payroll taxes. The FTB outlines your responsibilities on their website, so read it carefully to make sure you’re fulfilling all requirements.

With payroll taxes, it’s always best to be prepared and knowledgeable. Don’t let your business fall victim to costly mistakes by not knowing what they’re paying in California state payroll tax for their employees. Let us help you with the research. We have a team of experts ready to work on your behalf!