How to Stop the Increase in California State Tax Withholding

Your paycheck is shrinking. California now withholds 10% more in state taxes on your paycheck than before. Find out how to stop them!

Difficulty: Moderately Easy

Instructions

1. As of November 1, 2009, the State of California has increased the amount of state income taxes withheld from a worker's paycheck by 10%.

2. This is California's way of getting some very needed up-front money. By itself, it does NOT increase the state taxes you will owe on April 15th.
   
   For example, if you owe $295.00 in state taxes on April 15, 2009, you will get credit for the extra 10% the state took out in your November and December, 2009 paychecks.

3. Those who earn higher wages will experience the biggest change in their paychecks. For those with low incomes, the change in the withholding will be minor.

4. The only way to avoid the additional 10% state tax withholding is to INCREASE the number of allowances. You do this by telling your employer you need to adjust your withholding and they will give you a new form to fill out. Use the form to increase the allowances. The Form is DE 4. See below for a link to this form.

5. Be sure to make the change as soon as possible so that in 2010, you won't continue to see a smaller paycheck.

Tips & Warnings

• This article is for educational purposes only. It does not substitute for personalized advice from a knowledgeable California attorney or qualified tax consultant.
• This article was written in November, 2009. The law may change.

Resources

• Link to Form DE 4