Hey, California, Your Paycheck's Shrinking

State withholding up to 10.3% of each paycheck, up from 9.3%

Tuesday, Oct 6, 2009  |  Updated 11:49 AM PDT
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Hey, California, Your Paycheck's Shrinking

Will the state issue IOUs again next year, some are wondering?

On Nov. 1, every paycheck earned in California will get smaller, according to a published report.

The shrinkage won't happen because of some cosmic pay cut, or even because taxes are getting higher, reported the North County Times. It's just that the California state government needs a loan, and it's taking it from taxpayers.

During the summer, the Legislature and Gov. Arnold Schwarzenegger papered over some of the state's $24 billion budget deficit by withholding 10.3 percent of each paycheck, up from 9.3 percent, starting on Nov. 1, the paper reported. To put it into numbers, a Californian with two dependents and earning $2,000 in a pay period would have $93.48 withheld, up from $85.41.

The extra withholding means that when people file taxes the following April, those who normally receive a refund should receive a larger one, and those who pay taxes will pay less, according to the North County Times. By raising the withholding rate, the state can "accelerate" some income tax money into the current fiscal year. Those couple of bucks from each person's check add up to a $1.6 billion shift of income for the state, H.D. Palmer, spokesman for the Department of Finance, told the paper.

Because of the distinction between the calendar year and the fiscal year, most accountants say not to worry about making tax adjustments that would affect 2009.

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