Types Of Taxes Collected By The EDD
The EDD is responsible for collecting four types of taxes: (1) unemployment insurance (UI), (2) disability insurance (DI), (3) employment training taxes (ETT), and (4) personal income taxes (PIT). These are the taxes involved when an employer completes and files his or her quarterly and annual tax returns.
Unemployment Insurance (UI)
The California Employment Security System provides for two types of benefits to wage earners: unemployment insurance and disability insurance. Unemployment insurance is payable to cover employees who are unemployed through no fault of their own, able to work, available for work and actively seeking employment, and who have met all of the eligibility requirements of the law. The weekly benefit amount to which a claimant may be entitled is based on the amount of wages paid in the highest quarter of his or her base period. Employees of companies with “supplemental unemployment benefits” (SUB) plans are eligible for state benefits in addition to SUB when unemployed.
Disability Insurance (DI)
California has a disability insurance program to help protect the labor force against wage loss because of unemployment resulting primarily from non-occupational illness or injury. Most wage earners covered under the unemployment insurance provisions of the California Unemployment Insurance code (CUIC) are also covered under the disability insurance provisions of the Code. Exceptions are public school employees, employees of state funded institutions of higher education, other government entities, and individuals who filed religious exemption certificate, both with the EDD and their employers, declaring they rely upon prayer in the practice of religion for healing. Employees pay for disability insurance and its administration. Wage-earner contributions withheld by the employer are paid by the employer to either: (1) the Disability Fund or (2) a private plan (called a voluntary plan). Although coverage is mandatory, employers may choose private coverage. Those not choosing a voluntary plan are covered under the state plan.
Employment Training Tax (ETT)
The employment training tax was created by the Job Training Partnership Act. This Act authorizes a federally funded employment and training program. These funds serve many adults and youths in need of training each year.
The employment training tax is paid by the employer and is not withheld from the employee’s paycheck.
Personal Income Tax (PIT)
Under personal income tax withholding, the employer is required to withhold from the employee’s paycheck a calculated amount sufficient to pay California income taxes. This program is the largest source of revenue for the EDD’s Employment Tax Branch. The amount withheld annually totals in the billions of dollars. This revenue is deposited in the State General Fund.