How California withholds on a bonus
California has the highest supplemental withholding rate in the country and, unusually, two of them: 10.23% on bonuses and stock options, and 6.6% on other supplemental wages such as commissions and overtime paid separately. The Employment Development Department publishes both in its withholding schedules (DE 44). State Disability Insurance at 1.3% is also withheld from a bonus with no wage cap. On a $10,000 bonus the percentage method withholds $2,200 federal, $620 Social Security, $145 Medicare, $1,023 California and $130 SDI, leaving $5,882.
The 10.23% rate is far above what most Californians actually pay on a bonus. A single filer on $60,000 has a California marginal rate of 6% to 8%, so the state over-withholds by $200 to $400 on a $10,000 bonus and the excess returns at filing. Only filers with taxable income above $371,479, in the 10.3% bracket and up, face a rate at or above the supplemental figure. Under the aggregate method the state applies its regular tables to the combined paycheck, which for most salaries withholds less than 10.23%; the federal side rises to about $2,700 for a $60,000 earner.
What the withholding means for your California return
Both the federal 22% and California's 10.23% are above the marginal rates a typical salary faces, so a California bonus produces one of the larger refunds of any state relative to its size: roughly $750 federal and $300 state on a $10,000 bonus for a $60,000 single filer. SDI is not refundable; it funds disability and paid family leave. No California city taxes wages, so there is no local line. The California paycheck calculator shows the marginal rates for any salary.