Aug. 23--State income taxes are going up again in November.

Sort of.

In a little-noticed piece of the budget plan signed last month, the amount of state income taxes withheld from paychecks will increase 10 percent starting with wages paid after Oct. 31.

The accelerated withholding program comes on top of a genuine state income tax increase, approved by the Legislature as part of February's budget deal. Rates went up 0.25 percentage points for each tax bracket for the 2009 and 2010 tax years.

The latest move doesn't generate additional revenue. Rather, it front-loads it, bringing cash in more quickly in an effort to keep the depleted state treasury from running dry. State officials believe the move will generate an additional $1.7 billion in the current fiscal year, which ends June 30.

An individual's total annual income tax bill won't rise. The amount owed the following April will be adjusted accordingly.

"There's no overall tax increase; you just pay the taxes sooner," said Loren Kaye, president of the California Foundation for Commerce and Education, an affiliate of the California Chamber of Commerce.

The changes go beyond payroll withholding. Those who pay quarterly estimated income taxes will see their payments accelerated starting in January.

Under the new law, they'll pay 70 percent of their estimated taxes in the first half of the year. Currently they pay 60 percent.

As a fiscal conservative, Kaye isn't thrilled with the plan but accepts it.

"It's unfortunate that they had to do this. It's absolutely going to be a burden on wage earners and small businesses -- but it's certainly better than a tax increase," he said.

He said taxpayers can evade the accelerated withholding schedules by simply increasing the number of allowances on the withholding forms filed with their employers.

But adding allowances could lead to underpayment of taxes in the short term -- and a hefty tax bill, with interest and penalties, in April. Criminal penalties could also be imposed for supplying "false or fraudulent information," according to the state's form.

Perry Ghilarducci, a Sacramento certified public accountant, said most taxpayers probably won't bother fiddling with the number of allowances.

Even with the increase, state withholding will remain less than half the amount withheld for federal tax purposes, said Ghilarducci, a member of the board of directors for the California Society of CPAs.

For a typical married taxpayer making $75,000 a year and filing jointly, the amount withheld will rise about $16 a month, he said.

"You'll probably not even notice it," Ghilarducci said.

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Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.

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