Contrac2 Support : Payroll Tax Info : CA
The following information regarding California payroll tax changes is effective January 1, 2012. For the 2012 calendar year, these changes include the following:
Increase in the State of California Standard Deduction
The standard deduction for the State of California increases to $3,769 for Single, and $7,538 for Married/Head of Household. You can update these fields yourself on the Custom Screen (option "U") of the "CA" (California) record of the Tax Data File--see the sample screen that follows. (Reference: "2012 California Employer's Guide", DE44MM Rev38, Table 3, p63 .)
No Change in the State of California Bonus Pay Withholding Rate
The bonus pay withholding rate for the State of California remains unchanged at 6.6% (0.0660). You can check this field yourself on the Data Screen (option "T") of the "CA" (California) record of the Tax Data File. Verify that the “BONUS PAY W/H RATE” of the "CA" (California) record of the Tax Data File is set to 0.0660.--see the sample screen that follows. (Reference: "2012 California Employer's Guide", DE44MM Rev38, p14.)
Increase in the State of California Low Income Exemption
The low income exemption for the State of California increases to $12,527 for Single, and $25,054 for Married/Head of Household. You can update these fields yourself on the Custom Screen (option "U") of the "CA" (California) record of the Tax Data File--see the sample screen that follows.
Increase in the State of California Personal Exemption Credit
The personal exemption credit for the State of California increases to $112.20 per allowance. You can update this field yourself on the Custom Screen (option "U") of the "CA" (California) record of the Tax Data File. Change the "TAX CREDIT" value to "109". (Reference: "2012 California Employer's Guide", DE44MM, Table 4, p63.)
No Change in the State of California Unemployment Wage Limit
The California Unemployment wage limit remains unchanged at $7,000.
The California Unemployment Contribution rate, however, varies from company to company, from 1.5% to 6.2%. The Employment Training Tax rate remains at 0.1%. Refer to your Form DE-2088 that you receive from the State of California Employment Development Department (EDD) for your contribution rates for Unemployment Insurance and Employment Training Tax. Add these two rates together, and enter the sum as a decimal number for the employer unemployment rate. For example, if your DE-2088 indicates an Unemployment Contribution rate of 3.4% and an Employment Training Tax (ETT) rate of 0.1%, the total rate would be 3.5% or .03500 expressed as a decimal. Keep the "UNEMPLOYMENT TAX WAGE LIMIT" of the "CA" (California) record of the Tax Data File as 7000.00; the "UNEMPLOYMENT EMPLOYEE TAX RATE" is 0.00000, and the "UNEMPLOYMENT EMPLOYER TAX RATE" would be 0.03500, in the example I've just described--but your rate will probably be different. (If you have any questions on what your Unemployment rates should be, you can contact EDD Taxpayer Assistance Center at 888.745.3886.)
Increase in the State of California Disability Wage Limit
The California Disability Insurance (SDI) wage limit increases to $95,585. Change the value of the "DISABILITY TAX WAGE LIMIT" of the "CA" (California) record of the Tax Data File to 95585.00. (Reference: "Notice of Contribution Rates and Statement of UI Reserve Account for Calendar Year 2012")
Decrease in the State of California Disability Tax Rate
The California Disability Insurance (SDI) contribution rate decreases to 1.0%. Change the "DISABILITY EMPLOYEE TAX RATE" to 0.01000. (Reference: "Notice of Contribution Rates and Statement of UI Reserve Account for Calendar Year 2012".)
No Change in California Deduction for Additional Allowances
The Estimated Deduction for Additional Withholding Allowances remains at $1,000 per allowance. (Reference: "2012 California Employer's Guide", DE44MM, Table 2, p62.)
New California Withholding Tables
Following this notice are sample screens with the withholding rates for 2012. These changes should be made to the "CA" (California) record of the Tax Parameter File. You must access the Single, Married, and Head of Household) screens individually. (Reference: "2012 California Employer's Guide", DE44MM, Table 5, p64.)
