Is this Error in calculating taxes? Net pay of 1employee has reduced 5% for paycheck on Oct1st versus Sept 1st and past year. Gross pay has not changed in 1 year+.

Thank you for reaching the Community, rakesh.sharma. I'm here to share some information about the payroll taxes and how it is calculated in QuickBooks Online.

We received no reports of unusual behavior when calculating taxes in QuickBooks Online Payroll.

It's possible that the state or local tax rate has changed, which explains why your employees' net pay has decreased. Also, the calculation of state income taxes varies by state. Other states may or may not have local income taxes. 

You can visit the Payroll Compliance page for the details on California's tax rate and withholdings.

Furthermore, QuickBooks Online Payroll uses the percentage method to calculate income taxes. It also computes payroll taxes for your employees on a year-to-date basis rather than per transaction. Income taxes are based on your employees W-4 information, which includes:

• Employee's filing status
• Number of allowances or extra withholding amount in the employee setup
• Pay frequency
• Gross wage in a given pay period

This article contains more information about payroll tax limits and wage bases, which can also affect your employees' federal and state tax calculations: Understand payroll tax wage bases and limits.

Let me know if you have further questions about payroll taxes. I'll be here to help. Have a great day!