California Increases Income Tax Witholding By 10%

California has come up with another “creative” way to get some money from its residents. First, I had to figure out how to redeem my California IOU. Now starting back on November 1st, the state increased the income tax withholding on regular wages by 10%. There is no actual accompanying tax increase, they are just looking for an interest-free loan from now to when you file your income taxes.

According to the Franchise Tax Board, previously a single taxpayer making $51,000 a year and claiming one withholding allowance would have had $40.58 a week withheld from his or her paycheck. After Nov. 1, withholding increased to $44.64 a week, an increase of $4.06. Taking an extra $20 a month from someone making $51,000 a year seems more annoying in principal than anything else.

If you want to “undo” this gimmick, you can increase the number of withholding exemptions you claim on form DE-4, Employee’s Withholding Allowance Certificate, from your payroll department. You can also increase the exemptions on your W-4 form as well, but that just decreases the amount of federal tax withheld.

Fool around with the calculator at PayCheckCity and see how changing the number of allowances changes things (I don’t know if they’ve updated their calculators to include this change, but you’ll get the general idea). Just be sure that you’re paying enough income taxes to avoid underpayment penalties.

A much more detailed (and long-winded) article can be found at SacBee.com. Thanks to reader Sharon for the heads up.

Comments

  1. So they increase withholding, leading to greater tax refunds, which they will probably have to issue IOU’s for anyway. Sounds like a great way to decrease the security that California residents feel towards planning and using their own money.

  2. At what point is the public going to say enough is enough?! Politicians (on both sides) spend money as if it goes in Michelle Obama’s organic garden in the White House lawn and continue rely on tax payer’s to bail them out! By the time my kid is 6 years old; he will have more financial common sense than these politicians. You can’t spend money you don’t have!

  3. Those CA’s will never see that money again. A government promise is always pretty damn worthless anyway. That deserves all the suffering it has coming to it if it is not already there.

  4. Actually, CA increased the tax rate by 0.25 percent back in June (see http://www.ftb.ca.gov/aboutFTB.....e_31.shtml). Basically, this new withholding increase allows them to get some of that extra tax money now instead of next April.

  5. 10% new California witholding tax will not fix anything, sign the petiion to tell Sacramento.

  6. @Jesse – It is my understanding that the withholding tables were already adjusted accordingly for the 0.25% increase as of July 1st. The November 1st increase is on top of that.

  7. Oh California..I love you but you suck.

  8. Californians have nobody to blame but themselves. Good luck with those refunds and IOUs!

  9. California is nice to visit…but I wouldn’t want to live there!!

  10. Just pitiful. I’d make sure I owed every year if I were living there.

  11. Living in California is great. I get to attend one of the best universities in the nation for relatively cheap compared to what the out of state people pay to come here.

  12. Way to go Californians. Keep re-electing the same people. Thomas Jefferson once said “we are destined to the government in which we deserve.” He was a very brilliant man.

  13. If you can’t print money tax the citzens more. California is the biggest welfare state in the union.

  14. The only way out of this mess is repealing Prop 13 and go back to a sensible tax policy. CA has had a slow steady decline since the late 70s, and the chickens have finally come home to roost.

  15. Mellow out people from outside this state. A lot of us in CA HATE what they are doing to us and are overwhelmed by the dems in the state. We can move but let me ask you this, how many of you spent 20 years building a business and then just up and left. They have a lot of the small businesses by the shorts and BOY ARE THEY NOT LETTING GO!!! I dont know what to do but let me warn all of the other states, as CA goes so go you so smart a all you want but this carrier will take the whole navy with it. I dont say that lightly, I want us to get back to where we were but other states should not wish harm or say we deserve it. You guys and your states push for illegal alien rights and not taking care of the border and all sorts of liberal crap too. Illegal aliens cost this state billions and no one has the guts to take it on, not Republican or Democrat. The feds demand we jail them but hey wont pay us for it. I could go on but then I will start packing or have an anorism(sp?)…

  16. Nothing new – California has always increased withholding in order to make the budget look better – very short-term thinking. More revenues this year – more outflows next year (refunds). This has been going on a long time with mandatory withholding on commercial real estate sales, etc.

    It’s like the oldest (& most used) trick in the book.

  17. I have started a petition to stop the new 10% withholding by california. Lets sign it and stop the tax.

  18. What do you expect? You people elected a actor, to run your government.

  19. JoetheBankgeek says:

    Ca put out a welcome mat for every kook, welfare loafer and criminal decades ago. Then it went on to put out a welcome mat for every illegal who was lucky enough to break into the U S without getting deported. That explains it. Forget petitions and voting. There’s too many of them and they vote. Just move your money, property, business etc. to some other state.

  20. How about making those on public assistance take a 10% decrease in pay. Why does the working continue to pay for those who do not work. I was raised with the value of “you don’t work, you don’t eat”. Why do those on state assistance feel so much entitlement? This has to stop, they are breaking the country. We give them the opportunity to improve their lives by going to school, but it is so much easier to stay home and get paid. I am a nurse and when these girls come to the hospital to have their babies, I see they have great phones, laptops, cameras, purses, fingernails, tattoos, etc. If they can afford the luxuries, they can afford to support themselves without taking money from the hard working people of the State of California.

    Stop paying those who can work. It is not our job to support this lazy generation and if they want children, they should pay for their children. I pay for mine!

  21. Fedupw/Dems says:

    FairTax people! Everybody pays taxes,drug dealers,welfare bums,not just us hard working people who get held up at gunpoint by the government every time we EARN our paycheck.

  22. Caliblonde6 says:

    CA is in need of some major overhauling. I work 2 jobs at 60 hours a week and cannot afford medical insurance, and yet they want to take more from me, while (as confirmed by my post-partum nurse sister) they not only allow, but pay for illegal alien pregnant women to come here and have their baby. The child is then a US citizen (translation we pay to medically care and educate it) and the mother leaves and doesn’t pay taxes. How can we afford to pay for other country’s citizens healthcare but not our own? Then to top it off, they take even more from our paycheck at Christmas time? I am all for helping those in need, but don’t they realize that we can’t afford it? I think it’s time to stop cutting from those who are a productive part of society and cut from those who are not participating. Or at least stop letting them vote for those who are going to continue enabling them. Otherwise, I am going to have to submit to my Father-in-Law’s insistance to move to Texas.

  23. California Victim says:

    I just received a letter from the degenerates that run my bank “Chase” stating that not only had they placed a levy on my account for $3,200.00 but that they had also helped themselves to an additional $150.00 of my money for doing so.

    When I asked what this was about they said that the California Tax board had told them to do it and that I could reference the photo copy of the letter they attached. They said that because the name and social security numbers matched so I owe the money even though I didn’t live in California ( I live in Florida) and never lived in the “Tax Payer Address” they listed… They also I added that if it was a mistake they would not return my $150.00 either and I would need to try to get it back from the California Tax Board myself.

    Supposedly according to the California Tax Board they waited 16 years to collect interest without prior notice or any form of contact. They just took my money without even verifying if it was valid.

    How can this be legal? Do we now live in a tyrannical communist country now?? What ever happened to Due Process???

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