OnPay withholds all payroll taxes (federal, state, and local) during each pay run and makes all tax payments, in addition to filing Form 941 quarterly and Form 940 at year’s end for clients based in California.

Income tax rates in California vary based on an individual’s income and range from 1% to 12.3%, with higher rates applying to individuals with higher income levels. A tax rate schedule is available from the California Franchise Tax Board.

PIT withholding refers to the state’s personal income tax withholding requirement for employers. California employers must withhold a certain amount of state income tax from their employees’ wages and remit it to the state on their behalf; the amount is based on the employee’s taxable income and the withholding tables used by the state of California. Funds from PIT go toward maintaining public services such as: schools, infrastructure such as roads, park maintenance, and health and human services.