California has the most complex payroll tax system in the US. This guide covers state income tax, SDI, PFL, SUI, and ETT for 2026.
By ExpertPaystubs Editorial Team. Published 2026-02-05
California doesn't just have high income tax rates — it has an entirely separate ecosystem of payroll taxes that no other state matches in complexity. Between SDI, PFL, SUI, ETT, and 10 income tax brackets, California payroll is a category of its own.
California Payroll Taxes at a Glance (2026)
| Tax | Who Pays | Rate | Wage Base |
|---|---|---|---|
| State Income Tax | Employee | 1% - 13.3% | Progressive brackets |
| SDI (State Disability Insurance) | Employee | 1.1% | No cap (2026) |
| PFL (Paid Family Leave) | Employee | Included in SDI | Same as SDI |
| SUI (State Unemployment Insurance) | Employer | 1.5% - 6.2% | $7,000 |
| ETT (Employment Training Tax) | Employer | 0.1% | $7,000 |
California State Income Tax Brackets (2026)
California has 10 tax brackets — the most of any state:
| Taxable Income (Single) | Rate |
|---|---|
| $0 - $10,756 | 1% |
| $10,757 - $25,499 | 2% |
| $25,500 - $40,245 | 4% |
| $40,246 - $55,866 | 6% |
| $55,867 - $70,606 | 8% |
| $70,607 - $360,659 | 9.3% |
| $360,660 - $432,787 | 10.3% |
| $432,788 - $721,314 | 11.3% |
| $721,315 - $1,000,000 | 12.3% |
| Over $1,000,000 | 13.3% |
The additional 1% Mental Health Services Tax applies to income over $1 million.
SDI (State Disability Insurance)
SDI is California's biggest unique payroll tax.
2026 Changes
- Rate: 1.1% of all wages (no cap removed since 2024)
- Previously: Had a wage cap (~$153,164 in 2023). Now applies to ALL earnings.
- Who pays: Employee only (deducted from paycheck)
This means high earners in California pay significantly more in SDI than they did historically. An employee earning $300,000 pays $3,300/year in SDI.
What SDI Covers
- Short-term disability benefits (up to 52 weeks)
- Paid Family Leave (PFL) benefits
- Covers approximately 60-70% of wages during leave
Overtime Rules — California Is Stricter
California has daily AND weekly overtime rules:
| Hours Worked | Rate |
|---|---|
| Up to 8 hours/day, 40 hours/week | Regular rate |
| Over 8 hours/day OR over 40 hours/week | 1.5× (time and a half) |
| Over 12 hours/day | 2× (double time) |
| 7th consecutive day (first 8 hours) | 1.5× |
| 7th consecutive day (over 8 hours) | 2× |
Pay Stub Requirements
California Labor Code § 226 requires the most detailed pay stubs in the country. Every stub must include:
- Gross wages earned
- Total hours worked (non-exempt)
- Number of piece-rate units and rate (if applicable)
- All deductions
- Net wages earned
- Pay period dates
- Employee name and last 4 digits of SSN (or employee ID)
- Name and address of the legal entity employing the worker
- All applicable hourly rates and hours worked at each rate
Penalties: $50 for first violation, $100 for each subsequent violation per employee per pay period, plus attorney's fees.
How ExpertPaystubs Handles California
Our generator automatically calculates:
- All 10 state income tax brackets
- SDI at 1.1% with no wage cap
- Daily AND weekly overtime
- All 9 required pay stub fields per Labor Code § 226