CSLB Law & Business ExamEmployment RequirementsMedium
When calculating payroll for an hourly employee, which of the following taxes is withheld directly from the employee's wages rather than paid solely by the employer?
- AEmployment Training Tax (ETT)
- BUnemployment Insurance (UI)
- CFederal Unemployment Tax (FUTA)
- DState Disability Insurance (SDI)
Show answer & explanationAnswer & explanation
Correct answer: D. State Disability Insurance (SDI)
State Disability Insurance (SDI) is withheld from the employee's paycheck, along with Personal Income Tax (PIT), while UI, ETT, and FUTA are employer-paid taxes based on payroll.
Why the other options are wrong
- A. ETT is also an employer-only tax used to fund training programs.
- B. UI is funded entirely by the employer, not withheld from wages.
- C. FUTA is a federal tax paid entirely by the employer.
Payroll Tax Categories
California payroll taxes split into employee-withheld taxes (PIT, SDI) and employer-paid taxes (UI, ETT).
- PIT and SDI appear as deductions on employee paystubs
- UI and ETT are calculated on employer's payroll but not deducted from wages
- EDD administers all four California payroll tax programs
Memory trick: Employee pays PIT and SDI; employer pays UI and ETT.