January 10, 2020 California 2020 income tax withholding tables released The California Employment Development Department (EDD) issued the wage-bracket and percentage method withholding tables for calendar year 2020 to its website. The 2020 annual standard deduction amount for single, dual-income, and married employees increases to $4,537, up from $4,401?for 2019 (Table 3). For unmarried head of household, the annual standard deduction increases to $9,074. The 2020 annual exemption withholding allowance amount increases to $134.20 (Table 4), up from $129.80.?The Table 2 annual estimated deduction amount per additional withholding allowance remains at $1,000 per allowance. See also Table 1 for the low-income exemption amounts that are exempt from employer withholding. Supplemental wages The supplemental withholding rates continue at 6.6% and 10.23% for stock options and bonus payments. (Revenue and Taxation Code Section 18663; 2019 Publication DE 44, California Employer's Guide.) California Form DE 4 The 2020 Form DE 4, Employee's Withholding Allowance Certificate, has not yet been posted to the EDD website. Once available, it may be found here. The Method A (wage-bracket) instructions continue to indicate that an employer may require employees to file Form DE 4 when they wish to use additional allowances for estimated deductions to reduce the amount of wages subject to withholding. As we reported (EY Payroll Newsflash Vol. 20, #200, 12-5-2019), the IRS issued the final federal 2020 Form W-4, Employee's Withholding Certificate that incorporates changes from the Tax Cuts and Jobs Act and other changes to improve accuracy in the income tax withholding result. Of significant note, there are no withholding allowances on the 2020 Form W-4. Because of this, new employees and those who want to change their California withholding allowances should be encouraged to submit California Form DE-4. The 2020 Publication DE 44, California Employer's Guide, is also pending release and may provide more detailed instructions on how to determine California withholding in light of the 2020 Form W-4 release. Tables continue to include the voter-approved extension on personal income tax increase The 2020 tables continue to include the extension of the personal income tax on high wage earnings; approved by California voters on November 8, 2016, that was originally approved by voters in 2012 (Proposition 30) and was effective retroactively to January 1, 2012. Originally scheduled to expire at the end of calendar year 2018, 2016 Proposition 55 extended the expiration date for the tax increase to the end of calendar year 2030. Had Proposition 55 not been approved, in 2019 these tax rates would have reverted back to the pre-2012 rate of 9.3%. ———————————————
——————————————— EY Payroll News Flash
| |||||||||
| |||||||||
