Free California Payroll Tax Calculator and CA Tax Rates

Updated January 11, 2021

According to the Small Business Association, 99.2% of businesses in California are classified as “small businesses.” Whether you run an ice cream stand along the boardwalk or the tiny startup that will one day change the world, there’s one thing all California small business owners have in common: payroll taxes. Figuring out how to pay employees can be a huge hassle, but our payroll calculator simplifies the process so you can spend more time focusing on making your small business the best it can be.

To figure out your California payroll withholding and federal payroll taxes, just enter wage and W-4 allowances for each employee below. Our calculator will calculate gross pay, take out deductions, and come up with the net pay you’ll need for writing your employees’ paychecks.

See California tax rates

Calculate payroll for an employee:

If any of this terminology is confusing, don’t beat yourself up. Calculating payroll taxes is one of the last things a lot of employers want to think about — especially in a state like California that has numerous state taxes to sort out. If it helps, we also have guides to help small business owners learn more about the payroll process.

Federal Payroll Taxes

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 your 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 your 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 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 $142,800 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. You as the employer will also need 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.

California State Payroll Taxes

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 gives 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 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.

• 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, 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 2021, the rate is at 1.0% of annual income up to $122,909, which comes out to a maximum of $1,229.09 per employee.
  • Personal Income Tax (PIT), which 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.

Now Write Those Paychecks!

Feel that wave of relief? You’ve checked “payroll taxes” off your to-do list so you can move onto the important things. Once each employee’s net pay is calculated (taking deductions and withholdings into consideration), you’re in the clear. All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and UI taxes. Those numbers can add up quickly!

You can pay federal taxes online to the IRS here. Plus, here’s everything you need to know about federal tax filings.

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.