Which Payroll Taxes Are Paid By Employers in California?

California employers pay payroll taxes such as UI, ETT, FICA, FUTA, and Medicare. This article covers employer tax rates, payment deadlines, filing options, and payroll duties for California businesses.

By Brad Nakase, Attorney

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Table of Contents

1. Introduction

2. Federal Payroll Taxes

3. California Payroll Taxes

4. Individual Income tax

5. Payroll taxes in California: Due dates

6. How to file payroll taxes in California

7. How Employer Payroll Taxes Are Calculated

Introduction

As they say, there are only two things in this world that are certain, and taxes are one of them. It should come as no surprise that business owners, particularly in California, are not exempt from this rite of passage. Companies have to pay state payroll taxes in addition to US FICA taxes. Understanding the tax regulations in each state where the employees live is important.

California’s tax structure is particularly complicated. It is due to its progressive tax system. Your staff members will pay more taxes if they make more money. In a similar vein, your employer tax payments and the amount you must deduct from employees’ paychecks will increase if your business is flourishing and your team is overflowing with new hires.

Understanding the many kinds of taxes, the rates they charge, and who pays what is essential if you have workers in California, regardless of the size of your company. Now let’s get started.

Federal Payroll Taxes

1. Social Security Taxes

Social Security & Medicare taxes & Federal Insurance Contributions Act (FICA) taxes are examples of employer payroll taxes. These taxes are withheld from each salary (taxable salary). It is for the number of days worked and is paid equally by employers & employees. FICA is a federal payroll tax in the United States. It is taken out of every paycheck.

Employers contribute 6.2% of their workers’ gross income to the Social Security tax. Employers pay their portion of the taxes & deduct the same amount from their workers’ paychecks. The upper limit Social Security tax for 2026 is $10,918.20, with an annual earnings base limitation of $176,100.

2. Medicare Taxes

Employers and employees pay the 2.9% Medicare tax rate equally. Employees who make more than $200,000 annually are subject to an additional 0.9%. Only employees are required to pay additional Medicare taxes.

3. FUTA: Federal Unemployment Tax Act

The amount that the employer contributes to state unemployment tax determines the federal unemployment tax rate, which varies from 0.6 to 6%. Employers are the only ones who pay.

California Payroll Taxes

Payroll taxes in California are managed at the state level by the Employment Development Department (EDD). Employers in California must pay taxes if they have compensated one or more workers more than $100 in a given quarter. Within twenty days of a worker’s start date, California companies are required to report details about their hiring to the California New Employee Registry. This is when the payroll tax obligation starts.

There are different kinds of payroll taxes in California. We’ll go through what they constitute, who has to pay them, and how much you might be liable for.

1. Tax on unemployment insurance

Under the Social Security Act, California’s state UI (unemployment insurance) is a component of a nationwide program run by the US Department of Labor. It offers short-term compensation to individuals who are unemployed as a result of circumstances beyond their control, such as layoffs. Every year, the EDD sets the taxable wages and UI tax rates. The EDD informs new employers of their revised rate in December of every calendar year after they pay 3.4% for 2 to 3 years.

In addition to the state’s state tax, employers are usually required to pay a federal unemployment tax according to the Federal Unemployment Tax Act (FUTA).

2. Employment training tax

Funds for training staff members in particular industries are provided by the ETT (employee training tax). The primary objective of ETT funds, which are funded by employers, is to increase businesses’ competitiveness and promote a job market that is vibrant in California by enhancing workers’ skills and ensuring that companies invest in an efficient workforce.

3. State tax on disability insurance

Workers who suffer from diseases, injuries, or pregnancies unrelated to their jobs get short-term benefits under the SDI (state disability insurance) program. SDI tax is deducted from workers’ pay. It also provides PFL (Paid Family Leave) benefits to people who are unable to work while they:

Attend to a sick relative.
Take part in an event that qualifies because a family member is serving in the military.
Develop a bond with their newborn.

Individual Income tax

Public services, including schools, parks, roads, & healthcare, are funded by the PIT (personal income tax). Employers must deduct the state income tax from workers’ compensation. Income tax rates are determined by workers’ tax W-4 & DE 4 forms, and the EDD oversees the reporting, collection procedures, and compliance of PIT withholding.

There are two ways to figure out how much California tax on personal income should be withheld by employers.

The wage band table method, or Method A, is only applicable to salaries under $1 million. This approach allows you to determine the withholding amount depending on the number of withholding allowances, payroll period, and filing status. The pay bracket figures already incorporate the standard deduction & exemption allowance credit. Of the two approaches, this one is simpler.
The precise calculating approach is approach B. The payroll duration, filing status, corresponding number of allowances (withholding), regular deduction, & exemption allowance credit must all be entered using this approach, which necessitates additional calculations.

Payroll taxes in California: Due dates

Employers in California are required to pay the EDD employment training tax & unemployment insurance every quarter. The deadlines are the last day of the month that follows the quarter’s end. It is the following working day if it occurs on a holiday or weekend:

Due on April 30 for the first quarter (January–March)
Due on July 31 for the second quarter (April–June).
Third quarter due on October 31 (July–September)
Due on January 31 for the fourth quarter (October–December)

Depending on the state’s income tax withholding level & federal income tax pay schedule, companies may have to make deposits of the withholdings for personal income tax and state disability insurance more frequently than quarterly. Late payments may be expensive, with interest and a 15% penalty.

How to file payroll taxes in California

We’ve discussed the many kinds of taxes along with when to pay them, but how do employers in California effectively file taxes? There are several choices available to them.

1. Sign up for e-Services

The EDD’s e-Services for Company option meets the needs of employers seeking a quick, easy, and safe manner to handle payroll taxes in California. Among the tasks you can perform using e-Services are:

Deposit payments
File, modify, and print the results
Create, delete, or reactivate an account
Report independent contractors or new hires

Whether you are a company or a third-party agent, the EDD website provides instructions for maintaining a payroll tax account and enrolling in e-Services.

2. Express Pay

Payroll taxes in California can be submitted even more easily using express pay, which doesn’t require enrollment. Simply visit the CA.gov website and input your tax account details and payment details.

3. Other methods of payment

These are some more choices that are accessible alongside e-Services, express pay, & mail.

Bulk Transmissions for Federal/State Employment Taxes (FSET). This service, which is available to payroll providers and software developers, offers a standardized way to pay taxes.
EFT, or electronic funds transfer. ACH (Automated Clearing House) debit is a free method of making EFT payments, but ACH credit may include a cost. You must give the state of California permission to electronically transfer money from your bank account if you opt for debit. Your bank account needs to send money to the state to use credit.
Cash and credit cards (PayNearMe). Credit card payments can be made online or over the phone. PayNearMe is available at partnering establishments for cash payments. However, PayNearMe only takes up to $1,000 every single transaction, $2,500 during a period of 24 hours, and $10,000 per month, and it levies a $5.99 processing fee.

How Employer Payroll Taxes Are Calculated

Unlike FICA taxes and additional taxes, employer payroll taxes aren’t levied at a fixed rate. They are computed as a proportion of the employee’s earnings and their respective income group.

Wage adjustment: Employers might have to finish wage adjustment while completing the W-4 form if they want to make sure that the employee’s additional income (such as commissions or bonuses) and deductions are accurately reported. This step is essential to make sure you pay the correct amount of business payroll taxes.
Tentative withholding sum: You can determine the tentative withholding sum by using the wage bracket chart. It is found in IRS Publication 15-T. You will need to know the employee’s filing status and the amended wage amount.
Tax credits: Your workers’ payroll tax amounts may be altered if they get tax credits for dependents. You will deduct the whole dependent tax credit amount from the withholding amount shown on their Form W-4.
Additional taxes: Depending on the state you live in, the industry, and a variety of other variables, you may be required to withhold additional taxes. Form W-4, Step 4(c) is where these should be recorded. Calculating employer payroll taxes can be difficult, and doing it wrong can result in severe fines.

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1,447

Which Payroll Taxes Are Paid By Employers in California?

Introduction

Federal Payroll Taxes

California Payroll Taxes

Individual Income tax

Payroll taxes in California: Due dates

How to file payroll taxes in California

How Employer Payroll Taxes Are Calculated

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