CalSTRS takes 10.25% of your creditable compensation out of each paycheck if you were first hired to perform creditable service before January 1, 2013, and 10.205% if you were hired on or after that date. Those rates apply for the fiscal year running July 1, 2025, through June 30, 2026, and payroll deducts them automatically as a condition of your employment.1CalSTRS. Funded Status Rises Again; Contribution Rates Remain the Same
Which Rate Applies to You
Your hire date sets your rate for your entire CalSTRS career. The California Public Employees’ Pension Reform Act of 2013 split members into two tiers:2CalPERS/CalSTRS Overview Document. California Public Employees’ Pension Reform Act of 2013 (PEPRA) Overview
- 2% at 60: first hired to perform creditable service before January 1, 2013. Contribution rate 10.25%.
- 2% at 62: first hired on or after January 1, 2013. Contribution rate 10.205%.
Changing districts does not change your tier. If you previously held membership in another California public retirement system and qualify for reciprocity, that prior membership can preserve your pre-2013 classification.3CalPERS. Public Employees’ Pension Reform Act (PEPRA) Someone who joins CalSTRS for the first time on or after January 1, 2013, without reciprocity, falls into the 2% at 62 tier regardless of prior private-sector work.
The statutory base rate in Education Code Section 22901 is 8%. The actual rate you pay is higher because of adjustments authorized by state law to keep the pension fund on track.
What the Percentage Is Applied To
CalSTRS does not take its cut of your entire gross paycheck. The deduction is calculated against your creditable compensation. Under Education Code Section 22119.2, that includes salary or wages paid under a publicly available written agreement such as a salary schedule, plus any additional pay given to everyone in the same class of employees in the same dollar amount or percentage.4California Legislative Information. California Education Code 22119.2
Creditable compensation also covers pay for sick leave, vacation, and other employer-approved compensated leave. One-time bonuses and payments not available to everyone in the same class on the same terms are generally excluded. In practical terms, your contracted salary and standard stipends are subject to the CalSTRS deduction; individually negotiated or irregular payments often are not.
Calculating Your Monthly Deduction
Multiply your monthly creditable compensation by your tier’s rate.1CalSTRS. Funded Status Rises Again; Contribution Rates Remain the Same
- 2% at 60 member earning $6,000 per month: $6,000 × 0.1025 = $615.00.
- 2% at 62 member earning $6,000 per month: $6,000 × 0.10205 = $612.30.
The percentage stays the same across your career, but the dollar amount rises when your creditable compensation goes up, whether from a step increase, a column change, or a cost-of-living adjustment to the salary schedule.
How the Deduction Shows Up on Your Pay Stub
Most California school employers participate in the federal Employer Pick-Up Program under Internal Revenue Code Section 414(h)(2). Under that arrangement, the employer “picks up” your CalSTRS contributions so the deducted amount is not included in your taxable income for the year.5CalSTRS. Contributions Your contribution comes out of pre-tax dollars, which lowers your current federal income tax bill.
The tradeoff comes later. Contributions and the interest they earn are taxable when paid out as monthly retirement benefits or as a lump-sum refund.6CalSTRS. Refund of Contributions On your stub, these tax-deferred amounts may be labeled “Employer-Paid Member Contributions” even though they are still coming out of your pay. If your district does not participate in the pick-up program, your contributions are made with after-tax dollars and will not be taxed again on withdrawal.
Other Payroll Deductions Alongside CalSTRS
You still owe the 1.45% federal Medicare tax if you were hired on or after April 1, 1986.7CalSTRS. Medicare Premium Payment Program History It appears as a separate line on your pay stub. Educators exempt from Social Security who pay the Medicare-only portion are classified by the Social Security Administration as Medicare Qualified Government Employees.8Social Security Administration. Mandatory Medicare Coverage For a teacher earning $6,000 per month, Medicare works out to $87.00. Educators hired before April 1, 1986, may not be covered by Medicare at all, which can affect health coverage options after age 65.
Most California public school educators do not pay the 6.2% Social Security tax, because their districts have opted out of Social Security coverage through a Section 218 Agreement with the Social Security Administration.9Social Security Administration. Section 218 Agreements Your CalSTRS pension replaces Social Security retirement income. This exemption raises your take-home pay compared with private-sector workers at the same salary, but you do not earn Social Security credits during your teaching career.
Compensation Caps for High Earners
There is a ceiling on how much of your pay is subject to CalSTRS contributions. For 2025–2026:10CalSTRS. Limits
- 2% at 60 members: $350,000 per year, the federal IRC Section 401(a)(17) limit.
- 2% at 62 members: the lower of $350,000 or $187,369, a separate CPI-adjusted cap for members who joined under PEPRA.
Earnings above the applicable cap are not subject to CalSTRS deductions and do not count toward your retirement benefit. Most educators earn well below these thresholds, but highly compensated administrators or long-tenured educators at the top of a salary schedule should check their pay stubs late in the fiscal year.
Extra Deductions for Work Beyond One Year of Service Credit
If you take on extra-duty assignments and earn more than one year of service credit in a single school year, the additional earnings feed a separate account called the Defined Benefit Supplement Program. The rates on those excess earnings are:5CalSTRS. Contributions
- 2% at 60 members: 8% of earnings beyond one year of service credit.
- 2% at 62 members: 9% of earnings beyond one year of service credit.
Limited-term payments and retirement incentives are also directed to the DBS account for 2% at 60 members. The DBS acts as a supplemental savings account on top of your main Defined Benefit pension, and the contributions come out of the excess earnings themselves rather than adding to what is taken from your regular salary.