What Is the CA Employment Training Tax (ETT)?

The California Employment Training Tax (ETT) is a small employer-paid payroll tax of 0.1 percent on the first $7,000 of wages you pay each employee per calendar year, which caps the cost at $7.00 per worker annually and funds job training programs run by the state’s Employment Training Panel.¹ It’s one of four California state payroll taxes, and the only one specifically dedicated to workforce training.

What You Owe and the Wage Cap

The 2026 ETT rate is 0.1 percent (0.001), applied only to the first $7,000 each employee earns in the calendar year.¹ That ceiling matches California’s Unemployment Insurance taxable wage base. Once an employee crosses $7,000 in wages for the year, you stop owing ETT on anything else you pay them.

Do the math and the numbers are modest. A single employee generates $7.00 of ETT. A business with 50 employees owes $350 for the year. Compared with Unemployment Insurance (also employer-paid), State Disability Insurance, and Personal Income Tax withholding, ETT is the smallest line on your California payroll tax bill.²

The money goes to the Employment Training Panel (ETP), which reimburses employers for job-specific training. The program targets businesses facing out-of-state competition or working with emerging technologies, with a goal of helping employers retain and upskill workers.²

Which Employers Have to Pay It

If you’re subject to California Unemployment Insurance, you almost certainly owe ETT too. The threshold is paying more than $100 in wages in any calendar quarter; cross that line and you’re required to register as an employer and begin paying both UI and ETT.³

Household employers follow a different rule. The obligation starts when you pay $1,000 or more in cash wages in a calendar quarter, and once triggered, it continues through the rest of that year and all of the following year even if your wages drop back below $1,000.

ETT is strictly an employer expense. You can’t deduct it from an employee’s paycheck or ask them to cover it.²

Common Exemptions

Several categories of employment are exempt from both UI and ETT. The most common include federal, foreign-government, and other state-government employees; elected officials, legislators, and judges; workers at churches and organizations operated primarily for religious purposes; children under 18 working for a parent, a spouse working for a spouse, a registered domestic partner working for a registered domestic partner, and a parent working for a son or daughter; domestic workers in a private home whose employer hasn’t yet hit the $1,000 quarterly threshold; and medical interns who have completed a four-year medical school course and are serving an internship at a hospital.⁴ Election campaign workers, newspaper and magazine vendors buying at fixed prices for resale, hospital patients employed by the hospital, and foreign professional athletes performing occasional engagements in California are also outside the tax.

Registering With the EDD

New employers have 15 days from paying more than $100 in wages in a quarter to register with the Employment Development Department.³ The fastest route is the EDD’s e-Services for Business portal: create an account, select “New Employer,” and complete the online registration to receive your employer payroll tax account number. One registration covers all four state payroll taxes.

If you’d rather file on paper, the EDD uses different registration forms depending on your organization type: DE 1 for commercial employers, DE 1AG for agricultural employers, DE 1GS for government organizations, DE 1HW for household employers, and DE 1NP for nonprofits. Include your Federal Employer Identification Number so your UI tax credits apply correctly on your federal unemployment tax return.

Filing and Paying Each Quarter

ETT is filed and paid quarterly with your other California payroll taxes. Each quarter you submit the Quarterly Contribution Return and Report of Wages (DE 9) and the Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C), and you use the Payroll Tax Deposit form (DE 88) to remit the combined payment covering UI, ETT, SDI withholding, and PIT withholding.⁵

Due dates are the last day of the month after each quarter ends: April 30, July 31, October 31, and January 31. SDI and PIT withholdings may need to be deposited more often depending on your payroll size, but UI and ETT follow the quarterly schedule.

Most employers must file and pay electronically through e-Services for Business. Electronic payments don’t require a paper DE 88 coupon.⁵ Because ETT is such a small amount, the practical risk is accidentally omitting it from a combined deposit rather than struggling to afford it.

Penalties If You’re Late

The EDD applies the same penalty structure to ETT as to the other payroll taxes, and 15 percent can hurt even when the underlying balance is small. The main penalties:

Late or underpaid contributions: 15 percent of the unpaid amount.
Late filing more than 60 days past the due date: an additional 15 percent, stacking on top of the late-payment penalty.
Electronic payment noncompliance when e-filing is required: 15 percent of the contribution amount.
Failure to file wage reports within 15 days of a written EDD demand: $20 per employee.

Any of these penalties can be waived if you show good cause.⁶ A late $7.00 ETT payment produces a $1.05 penalty on its own, but if ETT is bundled into a late combined deposit covering UI for dozens of employees, the 15 percent applies to the whole late amount.

Getting Training Money Back Through the ETP

Paying ETT makes you eligible to apply for training reimbursement from the Employment Training Panel. The ETP uses performance-based contracts: it reimburses the cost of job-specific training after your employees finish the program and meet retention requirements. Trainees must complete at least eight hours of training, work full-time, finish a post-training retention period, and earn at least the ETP minimum wage during that retention period.⁷

Applications go through the ETP’s Cal-E-Force system on a first-in, first-out basis when funding is available. Initial eligibility review usually takes about a week, and incomplete applications are not advanced, so prepare every required section before you submit.⁸ If your workforce is unionized, upload union support or notice-of-intent letters with the application. The ETP prioritizes small and medium-sized businesses and industries offering long-term, high-quality employment, and some contracts allow progress payments as trainees hit milestones rather than requiring you to wait for the full retention period to end.⁷

1
Employment Development Department. Contribution Rates, Withholding Schedules, and Meals and Lodging Values
2
Employment Development Department. California State Payroll Taxes – Overview
3
Employment Development Department. Am I Required to Register as an Employer?
4
Employment Development Department. Information Sheet – Exempt Employment (DE 231EE)
5
Employment Development Department. Required Filings and Due Dates
6
Employment Development Department. Information Sheet – Penalty Reference Chart (DE 231EP)
7
Employment Training Panel. Frequently Asked Questions
8
Employment Training Panel. Application FAQs