New Employment Credit

Use the California Tax Form Calculator California Tax Form 3554 as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 California state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.

New Employment Credit
Part I Net Increase in Full-Time Employees
Section A – Enter your base year . See Part I, instructions for base year rules
Complete Section A to calculate the total number of annual full-time equivalents working in California during the base year. See Part I, instructions for base year rules.
1	Number of full-time hourly and salaried employees that were employed for the entire taxable year	1
2	Number of full-time hourly employees that were employed for less than 52 weeks during the taxable year	2
3	Total number of hours worked by employees in line 2 (not to exceed hours per employee)	3
4	Divide line 3 by . See instructions	4
5	Number of full-time salaried employees that were employed for less than 52 weeks during the taxable year	5
6	Total number of weeks worked by employees in line 5	6
7	Divide line 6 by . See instructions	7
8	Base year annual full-time equivalents. Add lines 1, 4 and 7. See instructions	8
Section B – Taxable year 2017
Complete Section B to calculate the total number of annual full-time equivalents in California during the current taxable year
9	Number of full-time hourly and salaried employees that were employed for the entire taxable year	9
10	Number of full-time hourly employees that were employed for less than 52 weeks during the taxable year	10
11	Total number of hours worked by employees in line 10 (not to exceed hours per employee)	11
12	Divide line 11 by . See instructions	12
13	Number of full-time salaried employees that were employed for less than 52 weeks during the taxable year	13
14	Total number of weeks worked by employees in line 13	14
15	Divide line 14 by . See instructions	15
16	Current year annual full-time equivalents. Add lines 9, 12 and 15. See instructions	16
Part II Available Credit
17	Net increase in full-time employees. Subtract line 8 from line 16. If the amount on line 17 is zero or less, stop, you do not qualify	17
18	Total qualified full-time employees. See instructions	18
19	Applicable percentage. Divide line 17 by line 18 (not to exceed )	19
20	Tentative credit. See instructions	20
21	Credit generated. Multiply line 20 by line 19	21
22	Pass-through new employment credit(s) from Schedule K-1 (100S, 541, 565, or 568). See instructions	22
23	Credit carryover from prior year	23
24	Total available new employment credit. Add line 21, line 22, and line 23	24
25a	Credit claimed. Enter the amount of the credit claimed on the current year tax return. See instructions. (Do not include any assigned credit claimed on form FTB 3544A.)	25a
b	Total credit assigned. Enter the total amount from form FTB 3544, column (g).If you are not a corporation, enter -0-. See instructions	25b
26	Credit carryover available for future years. Add line 25a and line 25b, subtract the result from line 24	26
Part III Credit Recapture
27	Credit recapture. See instructions	27

Last reviewed: : If you believe this form requires an update, please contact us.

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Frequently Asked Questions

How does Paid Family Leave show up on taxes?

PFL benefits are administered via EDD; federal/state taxability differs—check current guidance.

Does California allow Section 125 (cafeteria plan) pre-tax?

Many Section 125 items reduce taxable wages; details depend on CA conformity and plan design.

I moved mid-year—how is CA tax handled?

Use part-year rules; apportion income between states and file CA as part-year resident if applicable.

Does California tax ESOP distributions?

Distributions are generally taxable per federal/state rules; timing/character matters.

Can I add extra CA withholding to smooth refunds?

Yes—enter additional withholding and rerun to see impact on take-home and refund.

Important Notes

All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.