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Employer's Payroll Tax & Filing Requirements for the State of
California (CA)
Managing payroll in California comes with unique rules—from state income tax and disability insurance to unemployment contributions. With strict regulations on minimum wage, overtime, and paid family leave, staying compliant is essential.
This guide walks you through the key California payroll requirements to help you pay employees accurately and keep your business on track.
Applicable California Payroll Taxes
In California, employers are responsible for a few key state and federal payroll taxes. This guide will walk you through each of these requirements in detail.
- California has a progressive income tax with rates ranging from 1% to 13.3%, depending on the employee's income.
-
At the federal level, employers are required to withhold and pay Federal Income Tax, Social Security, and Medicare
(FICA) taxes. - Employers are also responsible for the Federal Unemployment Tax (FUTA).
Understanding these obligations is essential for maintaining compliance and avoiding penalties.
Register for CA state income tax and unemployment tax on your own
California tax agency:
- CA Employment Development Department (EDD) – income tax withholding and unemployment tax
To report and pay state income tax withholding and unemployment tax in California, employers must register with the CA Employment Development Department (EDD).
Steps to Register with the CA Employment Development Department (EDD)
1. Create a user name and password
- Step 1: Visit to the EDD's e-services for businesses site.
- Step 2: To get your username and password, click enroll on the right side of the page.
- Step 3: Enter your personal details and click continue.
- Step 4: Choose the security questions and answer them, and click Continue.
- Step 5: Review the “Enrollment Summary” and click submit.
- Step 6: To complete the enrollment process, click the verification link.
2. Register Online:
- Step 1: Sign in to the E-services for Business Profile. Use the previously created username and password.
- Step 2: Select the New Employer and choose the "Register for Employer Payroll Tax Account Number."
- Step 3: You'll be asked for information about your business and its operations in California.
- Step 4: Submit your completed online registration application to finish this step.
After successful registration, you will receive an Employer Payroll Tax Account Number in the mail 10-15 days later. You can use this number to file and pay state withholdings and unemployment taxes.
California New Hire Reporting
California employers are required by federal and state law to report all newly hired and rehired employees to the state's New Hire Reporting Center. This helps enforce child support orders and prevent unemployment and workers' compensation fraud.
Who needs to report?
All California employers (including government agencies, nonprofits, and household employers) must report:
- New hires: Any employee who completes a W-4 and will be paid wages.
- Rehires employees: Former employees returning after a break of 60 consecutive days or more.
What information must be reported?
Employers of California must report the newly hired and rehired employees. Here is the information required to report newly hired employees to the California Employment Development Department.
Employer information:
- Name
- Address
- Federal Employer Identification Number (FEIN)
Employee information:
- Full name
- Address
- Social Security Number (SSN)
- Date of hire
- Date of birth (optional but recommended)
How to report new hires in California?
To report newly hired employees, follow the steps given below.
1. Online (Preferred)
- Website: California New Hire Registry
- Create an account or log in.
- Enter the required employer and employee details.
- Submit electronically — confirmation is provided immediately.
2. Paper Form (Fax or Mail)
Download and complete the Form DE 34 (Report of New Employee(s)) from the state website.
-
Mail to:
California Employment Development Department
New Employee Registry
P.O. Box 997016
Sacramento, CA 95899-7016 - Fax to: (916) 319-4400
What are the penalties for not filing a New hire report in California?
If an employer in California fails to submit a New Hire report, they may face the following penalties:
- $25 per person for each new hire, rehire, or independent contractor that is not reported, reported late, or reported with incomplete information.
- $500 per person if the failure to report is due to a conspiracy between the employer and the employee or contractor to avoid reporting.
California State Payroll Tax Requirements
California employers must withhold state income tax (SIT) from employee wages based on Form DE 4 (Employee's Withholding Certificate) and also withhold State Disability Insurance (SDI) contributions. In addition, employers must pay Unemployment Insurance (UI) tax and Employment Training Tax (ETT) on the first $7,000 of each employee's wages.
State Income tax
California has a flat state income tax rate that ranges from 1% to 13.3% depending on the employee's taxable income. Employers must withhold tax based on the employee's California Form DE-4 and remit it to the Department of Revenue.
State Unemployment Tax
State unemployment taxes are state-level payroll taxes that employers pay to fund unemployment benefits for eligible workers who lose their jobs through no fault of their own.
Who is liable?
California employers are liable for SUI taxes if they meet the following conditions:
- Paid $1500 in wages during a calendar quarter or;
- Had at least one California employee working for any part of the week, for 20 or more different weeks during a calendar year.
California State Unemployment Tax Rate
Employers of California are required to pay state unemployment taxes to provide benefits for the employees. Here are the SUI tax rates offered by the CA Employment Development Department (EDD):
| California State Unemployment Tax Rate | |
|---|---|
| Taxable Wage Base | $7,000 |
| Tax Rate Range | 1.5% – 6.2% |
| New Employer Rate | 3.4% |
Employment Training Tax (ETT)
The Employment Training Tax (ETT) is an employer-paid payroll tax that funds workforce training programs in California. Employers pay this tax on the first $7,000 of each employee's wages. The rate is 0.1%, and it is reported quarterly on Form DE 9 and DE 9C along with other state payroll taxes.
State Disability Insurance (SDI)
State Disability Insurance (SDI) provides short-term disability benefits and Paid Family Leave for California employees. Employers must withhold this tax from employee wages at a rate of 1.3% for 2026, applied to all wages with no taxable wage limit. SDI contributions are reported and remitted quarterly to the California Employment Development Department (EDD) using Forms DE 9 and DE 9C.
California Minimum Wage Requirements
California sets its own minimum wage, which is higher than the federal rate and adjusts annually based on inflation. Employers must ensure they meet the current state minimum wage for all employees, including a separate, reduced rate for tipped workers—as long as tips make up the difference.
| Wage Type | California Rates (per hour) | Federal Rates (per hour) |
|---|---|---|
| Minimum wage | $16.90 | $7.25 |
| Tipped Minimum Wage | $16.90 | $2.13 |
| Actual Tip Credit | - | $5.12 |
Overtime Regulations
California follows the federal Fair Labor Standards Act (FLSA) for overtime rules, as the state has no separate overtime law. Non-exempt employees must be paid 1.5 times their regular rate of pay for any hours worked over 40 in a workweek.
Exemption:
Certain employees are exempt from overtime if they meet both the salary and duties tests under the FLSA. In California, this typically includes:
- Executive employees
- Administrative employees
- Professional employees
To qualify for exemption, these employees must earn at least $684 per week on a salaried basis and perform the specific job functions defined by the FLSA.
California Termination Reports
When an employee leaves your company due to resignation, layoff, or termination. California law requires employers to report this information to the California Employment Development Department (EDD). These reports help the state manage unemployment insurance claims and maintain accurate employment records.
Who needs to report?
All California employers who pay wages subject to unemployment insurance must report terminated employees. This includes full-time, part-time, and seasonal employees.
When is the deadline for the termination report?
Termination reports should be submitted within 20 days after the employee's last day of work. Timely reporting ensures accurate unemployment insurance processing.
How to Report Termination in California
1. Online (Recommended)
- Visit the EDD e-Services for Business portal and submit the employee's separation information.
2. Mail
Complete the termination report form and mail it to:
Employment Development Department
UI Tax & Wage Reporting
P.O. Box 989064
West Sacramento, CA 95798-9064
3. Fax
You can also fax the completed report to: (916) 558-5707
California State Tax Payments
California State Withholding Payments
California employers are required to withhold state income tax from employees' wages and remit these withholdings to the California Employment Development Department.
| Quarter | Filing Deadline |
|---|---|
| Quarter 1 (January - March) | April 30 |
| Quarter 2 (April - June) | July 31 |
| Quarter 3 (July - September) | October 31 |
| Quarter 4 (October - December) | January 31 |
Methods to deposit California State income tax withholding taxes
To deposit your state withholding taxes, you can use various payment methods, which include:
-
Online (Recommended):
- To pay online by enrolling with the Employment Development Department.
- Once you have your account, make payments and filings from your e-services account.
California does not accept mail payments. You must report your payments only on the California EDD website.
California State Unemployment Tax Payments
California employers must file Unemployment Tax and Wage Reports Form DE 9 and make corresponding tax payments to the Employment Development Department on a quarterly basis. The due dates are as follows:
| Quarter | Filing Deadline |
|---|---|
| Quarter 1 (January - March) | April 30 |
| Quarter 2 (April - June) | July 31 |
| Quarter 3 (July - September) | October 31 |
| Quarter 4 (October - December) | January 31 |
Methods to deposit California State unemployment tax withholding taxes
To deposit your state Unemployment taxes, you can use various payment methods, which include:
- Online (recommended): To pay your unemployment tax payment, sign in to the EDD's e-Services for Business.
California State Filings
Quarterly State Unemployment Tax Filings
Form DE 9 (Quarterly Contribution Return and Report of Wages): This is the quarterly form where you report total employee wages and calculate how much UI tax you owe.
Deadline: Unemployment taxes are due by the last day of the month following the end of the calendar quarter.
| Quarter | Filing Deadline |
|---|---|
| Quarter 1 (January - March) | April 30 |
| Quarter 2 (April - June) | July 31 |
| Quarter 3 (July - September) | October 31 |
| Quarter 4 (October - December) | January 31 |
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