As a result of the current state budget crisis, the California Employment Development Department (EDD) recently issued revised personal income tax tables that increase personal income tax withholding applicable to earnings paid on or after Jan. 1, 2009.
The new rates represent a one-quarter of 1 percent (.0025 percent) increase in the old tax rates. For example, if the old rate was 1.0 percent, the new rate is 1.25 percent.
The new state tax rates will be in effect for paychecks issued on July 1 for monthly paid employees and on July 8 for biweekly paid employees.
However, because the revised rates apply to all earnings in 2009, retroactive to Jan. 1, 2009, it is possible that UCSF employees may owe taxes at the end of the year if they do not adjust their state withholding allowances.
Employees can determine whether they will need to increase the amount of state tax withheld in order to avoid owing taxes at the end of the year by reviewing the California State Form W-4 DE 4 Employee Withholding Allowance Certificate [PDF].
This form includes instructions about estimating state income tax liability on an annual basis, using the new tax rates.
Employees who determine that they will not have enough state income tax withheld can increase the amount of their state income tax withholding by:
- reducing the number of exemptions claimed for state purposes or
- having extra money deducted from their paycheck for state income taxes
Employees can change their state tax withholding online by signing in to their personal account on At Your Service Online.
For additional information about California personal income tax, please visit the Franchise Tax Board website.
For more information about the new tax rates or for copies of the withholding schedules, please visit the EDD website.
Employees who have any further questions about this issue should contact Jason Henry, payroll compliance and customer service supervisor, at 415/476-1661.