California Tax Withholding on Supplemental Wage Payments
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California Tax Withholding on Supplemental Wage Payments

Work pays and California takes a part of the pay. Workers have to know how much to give to the state and employers how much to take out of the paycheck, but not only one kind of wages gets taxed. The Personal Income Tax (PIT) takes dollars and cents out of both regular wages and supplemental wages.

The regular wages paid to Californians are the first amount Californians have to pay Personal Income Tax (PIT) on. But there is a second part to the PIT money withheld from pay.

The tax on supplemental wages gets taken out of income just like the first part of the PIT paid on the take home income that every Californian counts on.

The Whole Tax

Productivity earns income, but the income always gets taxed. Wages are the main payments workers earn from the work they do for a business. But, there are payments that are frequently made for their work that are in addition to their regular wages. The California Employment Development Department (EDD) does not ask employers to withhold tax for one kind of earned income and then again withhold for another kind of earned income. The whole tax is withheld from each paycheck.

The Rest of The Pay: Supplemental Wages

There are other payments employers make to workers for their productivity. In California, these payments are called supplemental wages. Bonuses and commissions have to get counted. So does the overtime pay Californians earn for those hours put in after their regular day. There other supplemental wages that go by the names: sales awards, back pay, and reimbursements for moving expenses that a taxpayer can not deduct. Retroactive wage inceases also get taxed. Whatever the name, they definitely do not count as a zero the paycheck tax calculation sheet. They are all part of the earned income that California taxes.

Paid All Together At Once

Tax is not withheld separately when the regular wages and the supplemental wages get paid at the same time. The total of the two kinds of wages is used to calculate the tax. Employers can look up that pay amount on the withholding table.

Paid Separately

When an employer uses two separate acts to pay regular wages and supplemental ages, they have two options for calculating the tax to withhold. The total of the regular wages that are the current, or the most recent regular pay and the supplemental wages is used to calculate the withholding amount. But, it is not as simple as when the two are paid at the same time. Since tax is withheld separately from the regular wages, that amount withheld is subtracted from the full tax on the total wages. The rest of the tax is supplemental wage tax.

The second way to do the calculation for payments made after October 31, 2009 is to first withhold a flat rate amount from the supplemental wages without using any withholding exemptions the worker claims on their withholding allowance certificate. The employer looks up the rates. Stock options and bonuses have their own rate. The rest of the supplemental wages have a different rate.

Vacation Pay

Vacation pay can count as supplemental wages. It counts when payments are made in addition to regular wages for a vacation period.

The PIT Tax Breakdown

PIT is simply one tax on earned income. The tax withheld from regular wages and supplemental wages just needs to add up.


California Employment Development Department, Personal Income Tax Withholding: Supplemental Wage Payments, Moving Expense Reimbursements, and WARN Act Payments (January 2011).

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