California runs one of the more involved state payroll tax systems in the country. Beyond federal taxes, a California employer deals with four separate state items, each with its own rate and rules. Here is the full picture for 2026, and where each one lands.
Rates change most years — always confirm the current figures on your EDD notices. This is general information, not tax advice.
The four California payroll taxes
California payroll runs through the Employment Development Department (EDD) and breaks into four pieces: Unemployment Insurance (UI) and Employment Training Tax (ETT), which the employer pays; State Disability Insurance (SDI), which the employee pays; and Personal Income Tax (PIT) withholding. UI, ETT, and SDI are reported together on the quarterly DE 9 and DE 9C.
Unemployment Insurance (UI) — employer
UI is the employer’s experience-rated tax on the first $7,000 of each employee’s wages per year. New employers start at a standard rate (3.4%), and the EDD assigns your experience rate each year on your rate notice. Because it only applies to the first $7,000, UI stops for an employee once they cross that wage base for the year.
Employment Training Tax (ETT) — employer
ETT is a small, employer-only tax that funds workforce training: 0.1% on the same first $7,000 of wages as UI — a maximum of $7 per employee per year. Employers with a positive UI reserve account are subject to it; the EDD shows your ETT rate (0.1% or 0.0%) on the same rate notice as UI.
ETT is easy to overlook precisely because it is so small, but it belongs on the DE 9 alongside UI and is deposited with it.
State Disability Insurance (SDI) — employee
SDI funds Disability Insurance and Paid Family Leave, and it is withheld from the employee. For 2026 the rate is 1.3% of wages (up from 1.2% in 2025), and — since SB 951 — there is no wage cap, so it applies to every dollar of wages. On a $625 paycheck that is $8.13.
Personal Income Tax (PIT) withholding — employee
PIT is California income tax withheld from the employee based on their DE 4 (California’s W-4). It is computed on the employee’s wages and filing details and remitted with the other EDD taxes.
How Payrollix handles it
Payrollix calculates all four automatically for California employees — UI and ETT on the employer side (through the $7,000 base), SDI at the current 1.3% with no cap, and PIT withholding from the DE 4 — and rolls them onto the DE 9 / DE 9C. The 2026 rates are already loaded, and per-client UI and ETT rates come straight from your EDD notice, so what you deposit matches what the state expects.
See what flat per-client pricing looks like
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