California EDD: Employer and Payroll Tax Guide

The California Employment Development Department, commonly called EDD, administers California employment-tax reporting and programs that include Unemployment Insurance, State Disability Insurance, Paid Family Leave, and workforce services. Employers use EDD systems to register payroll-tax accounts, report wages, file returns, make deposits, and respond to notices.

EDD also pays benefits to eligible workers, but an employer's routine payroll interaction centers on registration, classification, withholding, reporting, and timely payment. EDD is separate from the IRS, Franchise Tax Board, and CDTFA.

When employers must register

Most businesses become subject to California employer registration after paying more than $100 in wages in a calendar quarter and generally must register within 15 days. Special rules and thresholds apply to household employers, agricultural employers, nonprofit organizations, government entities, and other arrangements.

Owners are not always employees. Sole-proprietor draws and partnership distributions are generally not wages merely because they are labeled "salary." Corporate officers who perform services may be employees. Worker classification also matters: calling a worker an independent contractor does not control if the legal test indicates employment.

Employers register for an employer payroll tax account number through EDD's e-Services for Business. This state number is different from a federal Employer Identification Number. Having an EIN does not complete California payroll registration.

What employers file with EDD

California employers commonly file:

• Quarterly Contribution Return and Report of Wages, DE 9
• Quarterly Contribution Return and Report of Wages (Continuation), DE 9C, with employee-level wage and withholding data
• Payroll Tax Deposit, DE 88, through the electronic payment process
• New-hire and independent-contractor reports when required

Forms and deposit timing are not necessarily the same. DE 9 and DE 9C are generally quarterly, while PIT and SDI deposits can be due more frequently depending on federal deposit status and California rules. UI and ETT are generally deposited quarterly. Employers should use the current EDD due-date calendar for their assigned schedule.

EDD's four state payroll taxes

EDD administers Unemployment Insurance (UI), Employment Training Tax (ETT), State Disability Insurance (SDI), and California Personal Income Tax (PIT) withholding.

UI and ETT are generally employer-paid. SDI and PIT are generally withheld from employees. Paid Family Leave benefits are funded through SDI rather than a separate PFL withholding line.

For 2026, UI rates for tax-rated employers generally range from 1.5% to 6.2% on the first $7,000 of subject wages per employee; new employers generally receive a 3.4% UI rate for two to three years. ETT is 0.1% on the first $7,000 when applicable. SDI withholding is 1.3% on all subject wages, with no wage ceiling. PIT withholding is determined from employee withholding information and current schedules, not one flat rate.

Example

Assume a new employer pays one employee $10,000 of wages in 2026 and all wages are subject to the taxes. At the general new-employer UI rate:

• UI: $7,000 × 3.4% = $238 employer cost
• ETT: $7,000 × 0.1% = $7 employer cost
• SDI: $10,000 × 1.3% = $130 withheld from the employee
• PIT: determined separately under the withholding schedules and employee elections

The employer's $245 UI/ETT cost should not reduce the employee's paycheck. The $130 SDI and calculated PIT reduce net pay and become liabilities until deposited. Federal payroll taxes are additional and are not included in this example.

EDD compared with other agencies

The IRS handles federal payroll obligations such as Forms 941, 940, W-2, federal income-tax withholding, Social Security, and Medicare. EDD handles California wage reporting and payroll taxes. The FTB administers the underlying California personal income tax, while EDD administers wage withholding collection and enforcement. CDTFA handles sales/use tax and special fee programs.

An employer may therefore have multiple filing calendars. Paying a federal payroll deposit does not pay EDD, and filing DE 9 does not file Form 941.

Notices, records, and account maintenance

An EDD notice may concern an unfiled report, payment mismatch, wage discrepancy, UI rate, worker classification, benefit charge, or account update. Match it to the state account number and quarter, then compare payroll registers, filed forms, payment confirmations, employee data, and general-ledger balances.

Maintain employee Forms W-4 and DE 4 when applicable, payroll registers, time records, wage detail, benefit and deduction records, deposit confirmations, quarterly reports, year-end forms, notices, and worker-classification support. Reconcile payroll every quarter and at year-end.

Update EDD when the business changes address, payroll agent, entity type, ownership, or employment status. Closing a business requires final reports, deposits, and account closure; ending payroll in software alone is not enough.

Common mistakes

• Confusing the EDD account number with an EIN
• Registering late after the first employee is paid
• Treating owners, officers, or contractors incorrectly
• Assuming a payroll service removes the employer's responsibility
• Filing quarterly reports without reconciling deposits
• Combining employer taxes with employee withholding
• Missing final returns or leaving an account open after payroll ends
• Responding to an EDD notice as though it came from FTB or the IRS

Frequently asked questions

Related terms

• California Payroll Taxes
• Unemployment Insurance
• State Disability Insurance
• Paid Family Leave
• California Franchise Tax Board
• California Department of Tax and Fee Administration

Official sources

• EDD — Payroll Taxes Resources
• EDD — Employer Payroll Tax Account Registration
• EDD — California State Payroll Taxes Overview
• EDD — e-Services for Business

The definitions and examples on this page are for informational purposes only and do not constitute tax advice. Tax laws change frequently and individual circumstances vary. Consult a qualified tax professional before making decisions based on this content.