Calculating California state income tax withholding
April 15, 2013 8:38 PM   Subscribe

I feel like this should be really easy, but I'm coming up with a non-sensical result. I am considering taking a job that would involve a pay cut (long story, I promise it's worth it). I am trying to calculate what my actual paycheck would be. I'm using the paycheck calculator at to figure this out. But the number it's giving me for California state income tax doesn't seem right.

I am currently payed a base salary of about $150k/yr. The new job pays a base of about $125k/yr. I am married filing jointly with no exemptions, and paid biweekly. The calculator on paycheckcity gives me a withholding rate that comes to 8.16% of gross pay on the 150k, but only 6.2% of gross pay on the 125k. I don't see how this could possibly be right. I confirmed that all the filing status, etc. is the same on both. I looked for other paycheck calculators online, but almost all of them end up being "powered by paycheckcity."

I know how to find the actual tax rates, but those need to be calculated against AGI, which is a little bit hard to derive in a paycheck context (lots of other incomes and deductions involved, etc.). What I *want* to find is an official explanation of the formula that is supposed to be used in calculating the withholding, so I can figure out where/if this is going wrong. I can't imagine that the pay difference I'm looking at would bump my tax rate down that much.
posted by anonymous to Work & Money (2 answers total) 1 user marked this as a favorite
California's Employment Development Department has the official schedules and formulas:For more, see Rates, Withholding Schedules, and Meals and Lodging Values.
posted by RichardP at 9:07 PM on April 15, 2013 [1 favorite]

Curious question. Normally, at your income level, I'd say just math out your expected AGI, figure out taxes owed, and budget on that; let the withholdings system do its thing and settle up at the end of the year.

The calculator on paycheckcity gives me a withholding rate that comes to 8.16% of gross pay on the 150k, but only 6.2% of gross pay on the 125k.

Trying to reconcile the documents RichardP linked to with tax brackets published online, I noticed that the documents mention Prop 30. Prop 30 was a ballot measure that increased taxes. I doubt California's moved the brackets again; a further bit of mathwork suggests that the withholding system in California adjusts the tax rate up ten percent; 6.00 percent becomes 6.60, and 9.3 becomes 10.2. I'm not sure why they overwithhold , but I imagine it has to do with risk of underpayment.

That 10.2 rate only kicks in above like 93k, so yes, your withholdings rate will jump dramatically as the 10.2 percent rate begins to seriously weight the calculation. And it will fall just as dramatically if you take the job. This is what progressive taxation looks like?
posted by pwnguin at 11:36 PM on April 16, 2013

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