California tax: Federal and State Income Tax Changes

September 2009


Federal

Effective April 1, 2009, the federal withholding tables changed due to the American Recovery and Reinvestment Act of 2009.

To get more information and verify you do not have too much or too little federal income tax withheld from your pay, use the IRS withholding calculator.


State

A new law (AB X3 3 Ch. 18 2009) raised state personal income tax rates and reduced the dependent exemption credit for the 2009 calendar year.

The new state withholding tables factor in changes for the tax rate increase only, so taxpayers claiming dependent exemption credits may need to modify their state withholding.

For more information and an example of the changes, see taxpayers should review their withholding to avoid tax bills next April.


Revised 2009 withholding tables

The EDD expects to release revised withholding tables for 2009 to reflect a 10 percent increase in early October 2009. ABX4 17 (Ch. 09-15), a budget trailer bill, inflates the withholding for all California wages paid on or after November 1, 2009, by adding an additional 10 percent to the amount currently being withheld.