What Is the California SDI Rate and How Is It Calculated?

State Disability Insurance (SDI) is a program providing temporary wage replacement for eligible California workers. This state-mandated program helps individuals who experience a loss of wages due to a non-work-related illness, injury, or pregnancy. It also extends coverage to those needing to take time off for Paid Family Leave (PFL), such as bonding with a new child or caring for a seriously ill family member.

Understanding State Disability Insurance

California’s State Disability Insurance (SDI) program offers partial income replacement when workers cannot perform their usual job duties due to specific circumstances, including physical or mental illnesses, non-work-related injuries, and conditions related to pregnancy and childbirth. The program also encompasses Paid Family Leave, which provides benefits for bonding with a new child or caring for a seriously ill family member.

The SDI program is funded entirely through mandatory payroll deductions from employee wages. Employers facilitate these contributions but do not contribute financially to the SDI fund themselves.

The 2024 SDI Contribution Rate

For 2024, the California SDI contribution rate is 1.1% of an employee’s taxable wages. This represents an increase from the 0.9% rate in 2023. A significant change for 2024 is the elimination of the wage base limit, meaning SDI contributions are now applied to an employee’s entire taxable wage amount, with no cap.

In previous years, there was a maximum annual wage subject to SDI contributions. The removal of this cap for 2024 means higher-income earners will contribute SDI on all their earnings, leading to potentially higher total annual contributions.

Calculating Your SDI Contributions

Calculating your SDI contributions is based on your total taxable wages for the year. Since the wage base limit has been eliminated for 2024, you will contribute 1.1% of every dollar you earn that is subject to SDI. Your total annual SDI contribution will be 1.1% of your gross wages, assuming all wages are subject to SDI.

For example, an employee earning $75,000 in taxable wages during 2024 would contribute $825 ($75,000 multiplied by 0.011). An employee earning $200,000 would contribute $2,200 ($200,000 multiplied by 0.011). The elimination of the wage cap directly impacts individuals with higher incomes, as their entire earnings are now subject to the SDI tax.

Employer Obligations for SDI

Employers in California have specific responsibilities regarding the State Disability Insurance program. Their primary duty is to accurately withhold SDI contributions from employee paychecks. These withheld funds must then be remitted to the state’s Employment Development Department (EDD). Employers do not contribute financially to the SDI fund; it is entirely employee-funded.

Employers are also required to provide employees with information about the SDI program. This includes posting notices and distributing brochures to new hires and employees requesting leave. When an employee files an SDI claim, employers must respond to EDD requests, typically within two working days, to verify employee information.

Exemptions and Special Cases

While most California workers are covered by SDI, certain employment categories may be exempt or have special rules. Most federal, state, and local government employees are excluded from mandatory SDI contributions. Some government workers may instead be covered by separate non-industrial disability insurance programs.

Self-employed individuals are not automatically covered by the state’s SDI program. However, they can elect coverage through the EDD’s Disability Insurance Elective Coverage (DIEC) program by paying premiums. Certain domestic workers, interstate railroad employees, and employees of some non-profit organizations may also be exempt from mandatory SDI participation. Employers may also offer an approved voluntary plan as an alternative to the state’s SDI program, provided it offers benefits at least equal to the state plan and receives employee approval.