California payroll tax guide for 2026.
A practical payroll reference for California employer registration, UI, ETT, SDI, state income tax withholding, new hire reporting, quarterly filings, payroll deposits, payday rules, and final wage timing.
California payroll taxes at a glance
| Payroll item | 2026 California rule | Payroll treatment |
|---|---|---|
| Employer registration | Most businesses must register with EDD within 15 days after paying more than $100 in wages in a calendar quarter. | Register through e-Services for Business and use the EDD payroll tax account number for filings and payments. |
| UI tax | New employers are assigned a 3.4% UI rate for two to three years. 2026 experienced rates under Schedule F+ range from 1.5% to 6.2%. | Employer-paid on the first $7,000 of wages per employee per calendar year. |
| ETT | The 2026 Employment Training Tax rate is 0.1%. | Employer-paid on the first $7,000 of wages per employee per calendar year, unless the employer’s notice shows 0.0%. |
| SDI | The 2026 SDI withholding rate is 1.3%. California has no SDI taxable wage limit. | Employee withholding on all wages subject to SDI. |
| PIT withholding | California personal income tax withholding uses California withholding schedules and employee withholding information. | Withhold state PIT from employee wages and deposit with EDD under the applicable deposit schedule. |
| New hire reporting | Report new or rehired employees who work in California within 20 days of the start date. | File Report of New Employee(s), DE 34, with the New Employee Registry. |
| Quarterly filings | DE 9 and DE 9C are filed each quarter. | File electronically through e-Services for Business, even for a quarter with no payroll while the account remains active. |
| Deposits | DE 88 is used to report and pay UI, ETT, SDI withholding, and California PIT withholding. | UI and ETT are due quarterly; SDI and PIT deposits may be due more often depending on PIT accumulation and federal deposit schedule. |
1. Register with California EDD
If you operate a business and employ one or more employees, EDD says you must register as an employer and set up an EDD payroll tax account within 15 days of paying more than $100 in wages in a calendar quarter. Registration creates the employer payroll tax account number used for returns, wage reports, payments, adjustments, and account updates.
EDD points employers to e-Services for Business for registration, electronic filing, electronic payments, account updates, and new employee reporting.
e-Services for Business
Use it to register, file returns and wage reports, make payments, view notices, and manage the payroll tax account.
EDD payroll tax account number
The state employer account number is required for EDD payroll tax filings, reports, payments, and correspondence.
Electronic filing and payment
California requires employers to submit employment tax returns, wage reports, and payroll tax deposits electronically.
2. UI, ETT, SDI, and PIT withholding
California has several payroll items that can appear together on the employer’s EDD filings. UI and ETT are employer contributions. SDI and California PIT are employee withholdings.
Unemployment Insurance (UI)
For 2026, EDD lists Schedule F+ for UI, with rates from 1.5% to 6.2%. New employers are generally assigned a 3.4% UI rate for two to three years. UI applies to the first $7,000 in wages paid to each employee during the calendar year.
Employment Training Tax (ETT)
The 2026 ETT rate is 0.1% on the first $7,000 of wages per employee per calendar year. EDD notes that some employers with a negative UI reserve account balance may have an ETT rate shown as 0.0% on the annual notice.
State Disability Insurance (SDI)
The 2026 SDI withholding rate is 1.3%. Effective January 1, 2024, California removed the SDI taxable wage limit, so all wages subject to SDI are included in the SDI withholding calculation.
California PIT withholding
California PIT withholding is separate from federal income tax withholding. Employees can use California Form DE 4, Employee’s Withholding Allowance Certificate, and employers should use the current California withholding schedules.
3. California filings and deposits
The most common EDD payroll forms are DE 34, DE 542, DE 9, DE 9C, and DE 88. EDD requires quarterly reporting and electronic filing for employment tax returns, wage reports, and payroll tax deposits.
| Form | What it does | Payroll note |
|---|---|---|
| DE 34 | Report of New Employee(s) | Report new or rehired California employees within 20 days of the start date. |
| DE 542 | Report of Independent Contractor(s) | Required in certain $600+ individual/sole proprietor contractor situations tied to Form 1099-MISC reporting. |
| DE 9 | Quarterly Contribution Return and Report of Wages | Reconciles wages and paid taxes for the quarter. |
| DE 9C | Quarterly Contribution Return and Report of Wages (Continuation) | Reports individual employee wages for each quarter. |
| DE 88 | Payroll Tax Deposit | Used to report and pay UI, ETT, SDI withholding, and California PIT withholding. |
For 2026 quarters, EDD lists the DE 9/DE 9C quarterly reporting periods as due April 1, July 1, October 1, and January 1, with delinquency dates at the end of the following month or the next business day when applicable.
4. Deposit timing
EDD says employer UI and ETT contributions are due quarterly. SDI and PIT deposit timing can be more frequent. California deposit requirements depend on the employer’s federal deposit schedule, payday, and accumulated state PIT withholding.
As a practical payroll rule: do not assume every California payroll tax deposit is quarterly. UI and ETT are quarterly employer contributions, while employee SDI and PIT withholding can move to monthly, semiweekly, or next-day deposit timing depending on the EDD deposit table.
California payroll setup checklist
- Register for an EDD payroll tax account number when required.
- Enroll in e-Services for Business for electronic filing and payment.
- Collect federal Form W-4 and California DE 4 when applicable.
- Set up UI and ETT employer taxes on the first $7,000 of wages.
- Set up SDI employee withholding at the current annual rate with no wage limit.
- Set up California PIT withholding using current California schedules.
- Report new or rehired employees within 20 days.
- File DE 9 and DE 9C each quarter and submit deposits on the correct schedule.
- Review California payday and final wage timing before building pay cycles.
5. Payday and final wage rules
California payday rules are a separate compliance layer from payroll taxes. The California DIR explains that wages generally must be paid at least twice during each calendar month on regular paydays designated in advance, with different timing rules depending on the earning period and pay frequency.
DIR’s payday FAQ also covers final wages. Because California final pay timing can be strict and fact-specific, payroll teams should verify the current DIR rule before processing a termination or resignation payment.
How California fits real payroll work
California is useful for separating federal payroll taxes from state payroll obligations. UI and ETT are employer taxes, SDI is employee withholding, and PIT is state income tax withholding. The state also adds operational judgment around registration triggers, electronic filing, deposit frequency, wage reporting, final pay timing, and source-based research.
California payroll FAQ
What is the California new employer UI rate for 2026?
EDD says new employers are assigned a 3.4% UI rate for two to three years. Experienced employer rates vary, and the 2026 Schedule F+ range is 1.5% to 6.2%.
What is the California UI wage base for 2026?
The California UI taxable wage limit is $7,000 per employee per calendar year for 2026.
What is the California SDI rate for 2026?
The 2026 California SDI withholding rate is 1.3%. EDD says all wages are subject to SDI contributions because the taxable wage limit was removed effective January 1, 2024.
When do California employers report new hires?
EDD says employers must report all new or rehired employees who work in California to the New Employee Registry within 20 days of the employee’s start date.
Are California DE 9 and DE 9C filed every quarter?
Yes. EDD says employers must file both DE 9 and DE 9C each quarter. If no wages were paid while the account is still active, EDD still considers the employer required to file.
Practice state payroll thinking with federal payroll fundamentals.
PrepToPay connects payroll tax rules, wage bases, forms, calculations, and source research so state payroll feels easier to apply in real payroll work.