Free California Payroll Tax Calculator and CA Tax Rates

Federal payroll taxes for California employers

You can use our California payroll calculator to figure out your employees’ federal withholding as well as any additional taxes you are responsible for paying as the employer.

Here’s a quick overview of what you need to know when you’re calculating federal payroll taxes. If you would like to get into each calculation in detail, check out our step-by-step guide.

• Calculate Gross Wages:
  • For all hourly employees, multiply their hours worked by their pay rate (and don’t forget to pay the higher rate for any overtime hours worked).
  • For all salaried employees, divide each employee’s annual salary by the number of pay periods your business has.

• Calculate Any Pre-Tax Deductions:
  • If your employees contribute to 401(k), FSA, or any other pre-tax withholding accounts, subtract the amount of these calculations from their gross pay prior to applying payroll taxes.
• Deduct (and Match) FICA Taxes:
  • Social Security Tax: Withhold 6.2% of each employee’s taxable wages up until they reach total earnings of $160,200 for the year. As an employer, you will need to match this tax one-for-one.
  • Medicare Tax: Withhold 1.45% of each employee’s taxable wages up until they have reached total earnings of $200,000 for the year. Employers are also required  to match this tax. However, for earnings above $200,000, employees need to pay what’s called an Additional Medicare Tax of 0.9%, along with the 1.45%. Only the employee is responsible for paying the Additional Medicare Tax.
• Pay FUTA Unemployment Tax:
  • You will need to pay 6% of the first $7,000 of taxable income for each employee per year. If you pay state unemployment taxes, you are eligible for a tax credit of up to 5.4%, making your FUTA tax rate effectively 0.6%. FUTA tax is the sole responsibility of the employer. Your employees are not responsible for paying this tax.
• Deduct Federal Income Tax:
  • Federal income tax ranges from 0% to 37%. Further withholding information can be found through the IRS Publication 15-T.
• Subtract Any Post-Tax Deductions:
  • Your employees could be responsible for post-tax deductions such as court-ordered wage garnishments, child support, etc. If so, you will need to withhold these deductions from their paychecks.

Once you have all your withholding figured out, there are a series of quarterly and annual payroll tax filings you’ll need to perform. But before you write out your paychecks, you’ll need to calculate and withhold California state taxes as well.

What is the state payroll tax in California?

Now that we’re done with federal income taxes, let’s tackle California state taxes. The State of California wins for the highest top marginal income tax in the country. It’s a progressive income tax, meaning the more money your employees make, the higher the income tax. The following graph provides insight into the varied tax rates in place for single filers.

More information can be found on the California Franchise Tax Board website.

The Golden State has four (4) state payroll taxes administered by the Employment Development Department (EDD):

1) Unemployment Insurance, 2) Employment Training Tax, 3) State Disability Tax, and 4) Personal Income Tax. You’re responsible for paying half of those taxes, while the other half should be withheld from each employee’s paycheck. Details and rates can be found on the EDD website.

In addition, California’s employment development department has released their 2023 employer’s guide, which includes information to help business owners stay compliant.

• What You Pay For:
  • Unemployment Insurance (UI) is issued by the U.S. Department of Labor. UI provides temporary payments to those who are unemployed against their own capabilities. Employers pay up to 6.2% on the first $7,000 in wages paid to each employee in a calendar year. New employers pay 3.4% for the first two to three years. Each December, you will be notified of your new rate.
  • Employment Training Tax (ETT), also known as funding for training. You are responsible for paying 0.1% of the first $7,000 of wages per employee a year. This one’s relatively cheap, maxing out at $7 per employee a year.
• What Is Withheld From Employees:
  • State Disability Tax provides temporary funding for non-work related disabilities as well as paid family leave for those caring for an ill family member or bonding with their newborn child. For 2023, the rate is at 0.9% of annual income up to $153,164 which comes out to a maximum of $1,378.48 per employee.
  • Personal Income Tax (PIT), is charged to California residents, as well as on income that nonresidents derive within California. The PIT is based on allowance filings on each employee’s W-4 or DE 4 form, and there is no maximum tax.

You can register and pay taxes online through your EDD account here.

Retirement requirements

Did you know that almost all employers in the state of California are required by law to provide their employees with access to a retirement savings plan? Learn more in our Calsavers program guide.

New hire reporting

All businesses are required to report new hires. In California, such hires must be reported to the state’s New Employee Registry within 20 days of the individual beginning their first day on the job. Once reported, the state will review your new employee against outstanding child support records in order to identify whether the individual owes back child support payments. If an outstanding payment turns up, the state will enforce payment orders via the employee’s paycheck.

Information provided to the state is also sent to a national directory of new hires to determine whether there may be outstanding child support payments from other states. Similarly, if this search finds payments due, the state will take action to recover that money from your employee’s paycheck.

As an employer you also have reporting responsibilities when rehiring an employee. The state defines a rehire as someone with whom:

• You had previously ended an employment relationship
• And who has been separated from your company for at least 60 consecutive days

Corporate income tax in California

If your small business is a C corporation, you may be required to file a California Corporation Franchise or Income Tax Return (known as Form 100). You will need to file this document with the state if your business is:

• Incorporated in California
• Doing business in California
• Registered to do business in California with the Secretary of State
• Receives California source income

In addition, there are specific guidelines surrounding your state income tax dues as a C corp in the Golden State. The state income tax rate for C Corps (excluding banks and financial institutions) is 8.84%.

Additionally, a minimum franchise tax of $800 must be paid the first quarter of each accounting period. This tax must be paid even if your corporation is inactive or operates at a loss. However, newly incorporated corporations do not have to pay the minimum franchise tax during their first year of business.

There are also exceptions to the franchise tax. If your business meets both of the following criteria, you get a free pass on the franchise tax bill:

• The tax year is 15 days or less
• Your business did not conduct any business in the state during those 15 days

Paid sick leave (law) 

In California, employers must provide at least three days (or 24 hours) of paid sick leave per year to eligible full-time, part-time, and temporary workers who meet these employees under the permanent paid sick law (PSL).

Qualifications include:

• Employees that work for the same employer for at least 30 days within a year in California
• Complete a 90-day employment period before taking any paid sick leave

It accrues at a rate of one hour of sick leave for every 30 hours worked. Employers may choose to offer more than the minimum required amount of paid sick leave.

Additional California payroll tax resources

Our calculator is here to help, but of course, you can never learn enough, especially when it comes to payroll taxes. Here are some additional resources and contact information to help you run California payroll:

State of California Employment Development Department (EDD): (866) 333-4606 | E-Services for Business | Register Online

Franchise Tax Board (payroll tax assistance): (800) 852-5711

Being a California employer isn’t always easy. If you want to take some of the administrative burdens off your shoulders, there are a number of terrific payroll software companies that can do all the heavy lifting for you.

Other useful paycheck calculators

If you’re a California employer, we have a simple payroll calculator at the top of this page that handles the math (and required tax deductions) for you in just a few clicks. That said, employers sometimes have to manage situations that require a bit more number crunching when cutting paychecks. For example, if you reward employees with bonus pay, Uncle Sam considers this income, and taxes must be withheld. On the other hand, when an employee leaves for another job, you may need to figure out a final paycheck. So, if you need a bit more help with the math, check out the additional calculators listed below.