Support : Payroll Tax Info : CA Tax Changes
The following information regarding California payroll tax changes is effective January 1, 2010. For the 2010 calendar year, these changes include the following:
Decrease in the State of California Standard Deduction
The standard deduction for the State of California for 2010 decreases to $3,637 for Single, and $7,274 for Married/Head of Household. You can update these fields yourself on the Custom Screen (option "U") of the "CA" (California) record of the Tax Data File--see the sample screen that follows. (Reference: "2010 California Employer's Guide", DE44MM Rev36, Table 3, p63.)
Increase in the State of California Bonus Pay Withholding Rate
The bonus pay withholding rate for the State of California for 2010 increases to 6.6% (0.0660). You can update this field yourself on the Data Screen (option "T") of the "CA" (California) record of the Tax Data File. Change the “BONUS PAY W/H RATE” of the "CA" (California) record of the Tax Data File to 0.0660.--see the sample screen that follows. (Reference: "2010 California Employer's Guide", DE44MM Rev36, p14.)
Decrease in the State of California Low Income Exemption
The low income exemption for the State of California for 2010 decreases to $11,130 for Single, and $22,261 for Married/Head of Household. You can update these fields yourself on the Custom Screen (option "U") of the "CA" (California) record of the Tax Data File--see the sample screen that follows.
Decrease in the State of California Personal Exemption Credit
The personal exemption credit for the State of California for 2010 decreases to $108 per allowance. You can update these fields yourself on the Custom Screen (option "U") of the "CA" (California) record of the Tax Data File. (Reference: "2010 California Employer's Guide", DE44MM, Table 4, p63.)
No Change in the State of California Unemployment Wage Limit
The California Unemployment wage limit for 2010 remains unchanged at $7,000.
The California Unemployment Contribution rate, however, varies from company to company, from 1.5% to 6.2%. The Employment Training Tax rate for 2009 remains at 0.1%. Refer to your Form DE-2088 that you receive from the State of California Employment Development Department (EDD) for your contribution rates for Unemployment Insurance and Employment Training Tax. Add these two rates together, and enter the sum as a decimal number for the employer unemployment rate. For example, if your DE-2088 indicates an Unemployment Contribution rate of 3.4% and an Employment Training Tax (ETT) rate of 0.1%, the total rate would be 3.5% or .03500 expressed as a decimal. Keep the "UNEMPLOYMENT TAX WAGE LIMIT" of the "CA" (California) record of the Tax Data File as 7000.00; the "UNEMPLOYMENT EMPLOYEE TAX RATE" is 0.00000, and the "UNEMPLOYMENT EMPLOYER TAX RATE" would be 0.03500, in the example I've just described--but your rate will probably be different. (If you have any questions on what your Unemployment rates should be, you can contact EDD Taxpayer Assistance Center at 888.745.3886.)
Increase in the State of California Disability Wage Limit
The California Disability Insurance (SDI) wage limit for 2010 increases to $93,316. Change the "DISABILITY TAX WAGE LIMIT" of the "CA" (California) record of the Tax Data File to 93316.00. (Reference: "Notice of Contribution Rates and Statement of UI Reserve Account for Calendar Year 2010")
No Change in the State of California Disability Tax Rate
The California Disability Insurance (SDI) contribution rate for 2010 remains unchanged at 1.1%. Change the "DISABILITY EMPLOYEE TAX RATE" to 0.01100; the "DISABILITY EMPLOYER TAX RATE" is 0.00000. (Reference: "Notice of Contribution Rates and Statement of UI Reserve Account for Calendar Year 2010".)
No Change in California Deduction for Additional Allowances
The Estimated Deduction for Additional Withholding Allowances remains at $1,000 per allowance. (Reference: "2010 California Employer's Guide", DE44MM, Table 2, p62.)
New California Withholding Tables
Following this notice are sample screens with the withholding rates for 2010. These changes should be made to the "CA" (California) record of the Tax Parameter File. You must access the Single, Married, and Head of Household) screens individually. (Reference: "2010 California Employer's Guide", DE44MM, Table 5, p63.)