Federal income tax

Use the employee’s W4-Form - Employee’s Withholding Certificate and the withholding methods described in Publication 15 from the Internal Revenue Service (IRS). You can download Publication 15 at the IRS website.

State income tax

For information about rates, forms, exemptions and withholdings, contact the Employment Development Department (EDD) or visit the website.

Social Security (FICA) and Medicare

Both you and your employee must pay Social Security and Medicare taxes.

The wage base limit increased for 2026. You must withhold and deposit the employee’s withheld taxes and pay a matching amount at the following rates:

Social Security - 6.2 percent (wage base limit for 2026 is $184,500); and

Medicare - 1.45 percent (no wage base limit).

State Disability Insurance (SDI) tax and Paid Family Leave (PFL) tax

SDI provides temporary disability benefits for employees who are disabled by a nonwork-related illness or injury. You must withhold monies from each paycheck.

PFL provides temporary disability benefits for employees who cannot work because of the need to care for a family member, bond with a child or for qualifying exigencies related to a family member’s military service. You must withhold monies from each paycheck.

The SDI withholding rate for 2026 is 1.3 percent, which includes the rate for PFL, with no taxable wage limit and maximum withholding for each employee subject to SDI contributions.