California State Tax Routine (CATX)

The California State Tax Special Routine Processing utilizes the following steps:

Line 1

Multiply the employee’s gross wages for the current payroll period by the number of payroll periods in a year to obtain their Annualized Gross Income (GI).

Line 2

Compare the Annualized Gross Income to the Low Income Exemption Amount*. If the Annualized Gross Income is below the Low Income Exemption Amount, taxes are not withheld. If the Annualized Gross Income is above the Low Income Exemption Amount, proceed to Line 3.

Line 3

Determine the employee’s deductions:

Standard Deduction**
Regular Withholding Allowances***
Estimated Deductions Allowances****

Line 4

Determine the Taxable Amount by subtracting Lines 3A and 3C from Line 1.

Line 5

Using the Marginal Tax Rates (DEDX) entries for the California State Tax deduction, compute tax on the Taxable Amount (Line 4).

Line 6

Subtract Line 3B from Line 5 to adjust for regular withholding allowances.

Line 7

Divide the amount on Line 6 by the number of payroll periods in a year to determine the employee’s California Withholding Tax for the pay period.

*Determine the Low Income Exemption Amount

If the employee’s State Tax Allowance count is 0 or 1, the Low Income Exemption Amount is the Minimum Annual Gross Amount.
If the employee’s State Tax Allowance count is 2 or more, the Low Income Exemption Amount is the Maximum Annual Gross Amount.

**Determine the Standard Deduction Amount

Take the Annual Exemption Amount on the Tax Parameters (TAXP) entry for the employee’s Alabama State Tax deduction and Marital Status * the number of State Tax Allowances on the employee’s Employee Tax Parameter (TAX). If the employee’s State Tax Allowance count is greater than 1, use 1 instead.

**Determine the Dependents Amount

The California State Tax Routine uses the following fields on TAXP to determine the Dependents Amount: Standard Deduction, Minimum Deduction Amount, Maximum Deduction Amount, Minimum Gross Salary, and Maximum Gross Salary.

If the employee’s GI is equal to or less than the Minimum Gross Salary, multiply the Additional State Tax Allowance value from the employee’s TAX enrollment by the Maximum Deduction Amount.
If the employee’s GI is equal to or greater than the Maximum Gross Salary, multiply the Additional State Tax Allowance value from the employee’s TAX enrollment by the Minimum Deduction Amount.
If the employee’s GI falls between the Minimum Gross Salary and Maximum Gross Salary, multiply the following: (Maximum Deduction Amount * Standard Deduction Amount) * Additional State Tax Allowance value from the employee’s TAX enrollment.
Use the resulting amount as the Dependents Amount in the Alabama State Tax Special Routine Process.

Data Setup Considerations

Sites will need to ensure they have implemented the following Business Process/Data Setup changes at their site prior to using the California State Tax Routine.

Tax Parameters (TAXP) Setup for California State Tax Deductions:

The Annual Exemption Amount is the Estimated Deduction Amount.
The Minimum Standard Deduction Amount is the Standard Deduction Amount where the number of Exemptions is 0 or 1.
The Maximum Standard Deduction Amount is the Standard Deduction Amount where the number of Exemptions is 2 or more.
The Standard Deduction Rate is the Exemption Allowance Rate.
The Minimum Annual Gross Amount is the Low Income Exemption Amount where the number of Exemptions is 0 or 1.
The Maximum Annual Gross Amount is the Low Income Exemption Amount where the number of Exemptions is 2 or more.

Employee Tax Parameter (TAX) enrollment (Note: this only applies to employees enrolled in a Tax Class (TAXC) that includes a California State Tax Deduction).

The State Tax Allowance field is the Regular Withholding Allowance count.
The Additional State Tax Allowance field is the Estimated Deductions Allowance count.