What Is SDI Withheld on My Paycheck?

State Disability Insurance (SDI) is a common payroll deduction. This withholding contributes to programs designed to provide financial support when an individual is unable to work. Understanding its purpose and mechanics is helpful for employees reviewing their pay statements.

Understanding State Disability Insurance (SDI)

SDI is a state-mandated program offering partial wage replacement to eligible workers. It provides financial support when employees experience a non-work-related illness or injury preventing them from performing job duties, or need time off to care for a seriously ill family member or to bond with a new child. This insurance is funded through mandatory payroll deductions from employee wages in states where such programs exist. The program acts as a safety net, bridging the financial gap when an individual cannot earn their usual income due to a temporary medical condition. SDI is distinct from workers’ compensation, which covers work-related injuries or illnesses, and is funded solely by employee contributions.

How SDI Contributions are Determined

The amount withheld for SDI is calculated as a percentage of an employee’s taxable wages. Each state sets a specific contribution rate, which can change annually. This rate applies to earnings up to a certain annual wage base limit. For instance, if a state’s SDI rate is 1.2% and the taxable wage base is $145,600, an employee earning $50,000 would have $600 withheld ($50,000 x 1.2%). If an employee earns more than the wage base limit, only income up to that limit is subject to the SDI tax. Payroll systems automate these calculations, ensuring the correct amount is deducted and remitted to the state’s disability insurance fund.

States with SDI Programs

SDI is not a federal program and is not universal across all U.S. states. Five states operate mandatory SDI or similar temporary disability insurance (TDI) programs: California, Hawaii, New Jersey, New York, and Rhode Island. While the core concept of partial wage replacement for non-work-related disabilities is consistent, each state’s program has its own specific rules, names, and administrative bodies. For example, Hawaii and New Jersey refer to their programs as TDI. Some states may also allow employers to offer private plans that meet or exceed state requirements.

Benefits Covered by SDI Programs

SDI contributions fund two main types of benefits: Disability Insurance (DI) and Paid Family Leave (PFL). DI benefits provide partial wage replacement when an eligible worker cannot perform their regular work due to a non-work-related illness or injury, including physical or mental health issues, surgery recovery, or pregnancy-related conditions. PFL benefits offer financial support for qualifying reasons distinct from an individual’s own disability. These reasons include caring for a seriously ill family member, bonding with a new child (through birth, adoption, or foster care), or assisting with events related to a family member’s military deployment. Benefit duration and amount are determined by state-specific rules and past earnings.

Eligibility for SDI Benefits

To receive SDI benefits, individuals must meet specific eligibility criteria, which vary by state. A common requirement is being unable to perform regular work for a minimum period, often at least eight days, due to a qualifying disability or need for leave, and having experienced a loss of wages. Applicants generally need to have earned sufficient wages from which SDI deductions were withheld during a defined “base period.” This base period typically covers a 12-month timeframe, usually several months prior to the claim start date. Medical certification from a licensed healthcare provider is also typically required to confirm the disability or condition preventing work.