January 13, 2021
California 2021 income tax withholding tables released, use of California DE 4 is mandatory
The California Employment Development Department (EDD) issued the wage-bracket and percentage method withholding tables for calendar year 2021 to its website.
The supplemental withholding rates continue at 6.6% and 10.23% for stock options and bonus payments. (Revenue and Taxation Code Section 18663; 2021 Publication DE 44, California Employer's Guide.)
New California employees are required to use state Form DE 4 in addition to federal Form W-4
California employees are now required to submit both a federal Form W-4, Employee's Withholding Certificate, and state Form DE 4, Employee's Withholding Allowance Certificate, when beginning new employment or changing their state withholding allowances. Previously, an employer could mandate use of state Form DE 4 only when employees elected to claim additional allowances for estimated deductions. (See Tax Alert 2020-096, 01-15-2020.)
New hires and existing employees changing their California income tax withholding elections must submit both the Form W-4 and the Form DE 4. If a new employee does not submit state DE 4, the employer must withhold California state income tax as if the employee is single and claiming zero withholding allowances.
Employees who submitted a federal Form W-4 before 2020 and do not wish to change their California income tax withholding allowances are not required to submit a new Form DE 4 and employers should continue to calculate withholding based on previously submitted Forms W-4.
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