What Is State Disability Insurance Tax on My Paycheck?
Understand the State Disability Insurance tax deduction. This state-run program provides partial wage replacement if you can't work due to a short-term disability.
If you see a deduction on your paycheck labeled “SDI,” it represents a mandatory State Disability Insurance tax. This state-level payroll tax funds a short-term disability program providing partial wage replacement to workers unable to perform their jobs due to a non-work-related illness, injury, or pregnancy. This deduction is separate from federal taxes like Social Security or Medicare, as the funds are managed at the state level, with tax rates and benefits varying by location.
States with Mandatory SDI Programs
Only a few jurisdictions in the United States require employees to pay into a state-run disability insurance program. These include California, Hawaii, New Jersey, New York, and Rhode Island, along with the territory of Puerto Rico. Each location has its own program with an official name, and familiarizing yourself with these names can help you identify the specific program you are contributing to.
- California: California State Disability Insurance (CASDI)
- Hawaii: Temporary Disability Insurance (TDI)
- New Jersey: Temporary Disability Benefits (TDB)
- New York: Disability Benefits Law (DBL)
- Puerto Rico: Temporary Non-Occupational Disability Insurance
- Rhode Island: Temporary Disability Insurance (TDI)
Calculating the SDI Deduction
The amount of SDI tax deducted from your paycheck is determined by state-specific rules, including a set tax rate and an annual wage limit. For example, in California, the tax is 1.2% for 2025 and is applied to all of an employee’s wages with no income limit. Rhode Island applies a 1.3% rate for 2025, but only on the first $89,200 of an employee’s wages.
New Jersey’s system for 2025 requires employees to contribute 0.23% on the first $165,400 of wages, with employers also contributing. New York employees contribute 0.5% of their wages, but the deduction is capped at $0.60 per week. In Hawaii, the cost is shared, with an employee’s contribution capped at 0.5% of their weekly wage.
Understanding SDI Benefits
The SDI tax you pay funds a program designed to provide financial support when you are unable to work due to a temporary medical condition. A requirement for eligibility is that the disability must be non-work-related. Injuries or illnesses that occur on the job are covered by a separate workers’ compensation program funded by employers. SDI covers situations like recovery from an illness, a serious injury, or pregnancy and childbirth.
The benefits replace a portion of your regular income, calculated as a percentage of your average wages from a specific “base period.” This base period is a 12-month window that starts about 17 months before your disability began. For instance, New York’s benefit is 50% of an employee’s average weekly wage but is capped at a maximum of $170 per week.
These benefits are for short-term situations, with states setting a maximum duration for payments that ranges from 26 to 52 weeks. To qualify, you must have earned a minimum amount of income during your base period. California requires you to have earned at least $300 in your base period, while in New Jersey, you must have worked for 20 weeks earning at least $283 per week or have earned a combined total of $14,200 in your base year.
The Process for Claiming Benefits
The first step is to notify your employer of your condition, but the formal application is submitted directly to the state agency. A requirement of the application is obtaining a medical certification from a licensed health professional, who must complete and sign a portion of the claim form to certify your disability. It is your responsibility to ensure your healthcare provider submits this certification promptly.
You must complete and submit the official claim form, which may have a specific number like “DE 2501” in California or “DB-450” in New York. Most states offer an online portal, which is the fastest way to file. You must file your claim within a specific timeframe, which varies by state. For example, a claim must be filed within 30 days of the disability in New York, while California allows 49 days, and Hawaii provides a 90-day window. Filing after the deadline may lead to disqualification or a loss of benefits.