What Is the SDI Tax on My Paycheck?
Demystify the SDI tax on your paycheck. Learn the purpose of this payroll deduction and the crucial support it provides during challenging times.
State Disability Insurance (SDI) often appears as a deduction on paychecks. This mandatory payroll deduction funds a program designed to provide partial wage replacement for eligible workers who experience a temporary loss of income due to non-work-related illnesses, injuries, or family leave.
Understanding State Disability Insurance
State Disability Insurance (SDI) is a social insurance program offering partial wage replacement for employees unable to work due to their own non-work-related illness, injury, or to care for a family member. This is distinct from workers’ compensation, which covers work-related incidents, and unemployment insurance, which is for those ready to work but unable to find a job. SDI programs are typically state-mandated. Mandatory SDI programs operate in California, New York, New Jersey, Rhode Island, Hawaii, Washington, Massachusetts, Connecticut, Colorado, Oregon, Maryland, and the District of Columbia. Some states may also permit employers to offer voluntary plans through private insurers, provided these plans meet or exceed the state’s minimum requirements and are approved by a majority of employees.
How SDI Is Calculated on Your Paycheck
The SDI tax is calculated as a percentage of an employee’s gross wages. This percentage, or tax rate, can vary by state and may be adjusted annually. For example, California’s SDI withholding rate for employees is 1.2% in 2025.
Many states implement an annual taxable wage limit, meaning that once an employee’s earnings surpass this threshold, no further SDI taxes are withheld. However, some states, like California as of January 1, 2024, have removed this wage base limit, applying the SDI tax to all total wages. The SDI tax is primarily employee-funded through mandatory payroll deductions, though some states allow employers to contribute or cover the employee’s share.
Benefits Provided by SDI
SDI programs offer two main types of benefits: Disability Insurance (DI) and Paid Family Leave (PFL). Disability Insurance provides partial wage replacement when an employee is temporarily unable to perform regular job duties due to a non-work-related illness, injury, or pregnancy. This includes health conditions like physical or mental illnesses, injuries, and childbirth complications.
Paid Family Leave offers financial support when an employee needs time off for specific family-related reasons. This includes caring for a seriously ill family member, bonding with a new child after birth, adoption, or foster care placement, or managing qualifying exigencies arising from a family member’s military deployment. While both DI and PFL provide wage replacement, they address different circumstances, ensuring a broad safety net for workers facing various life events.
Claiming SDI Benefits
To claim SDI benefits, individuals must meet eligibility criteria, including sufficient wages earned in a base period and inability to work due to a covered reason. For Disability Insurance claims, a licensed health professional must certify the disability. Paid Family Leave claims require documentation of the qualifying family event.
The application process involves submitting a claim form, which can typically be done online or by mail. Many states recommend filing claims no earlier than nine days and no later than 49 days after the disability or family leave begins to avoid delays. A waiting period, typically seven days, applies before benefits begin, during which no payments are issued. Benefit amounts are determined based on a percentage of past wages earned during a base period, with payments often issued bi-weekly and a maximum duration, such as up to 52 weeks for disability benefits.