Many companies offer temporary disability insurance as a paid benefit to their employees. California, on the other hand, is one of five states that requires an employee-paid state disability insurance (SDI) tax (the other four are Hawaii, New Jersey, New York, and Rhode Island). This tax is levied in addition to the standard required payroll taxes, which include federal income tax, state income tax, Social Security tax, Medicare tax, and in some instances local tax.
What is CA SUI/SDI Tax?
California’s state unemployment insurance, or SUI, is an employer-paid tax used to provide temporary benefits when an employee is laid off. California SDI tax is an employee-paid tax that covers temporary disability or paid family leave.
CASDI was established in 1946 to provide short-term wage replacement benefits to employees unable to work due to non-work-related illnesses, injuries, or pregnancy. Over the years, the program expanded to include paid family leave, offering benefits for caregiving or bonding with a new child.
What is CA SDI Tax Used For?
The funds from this mandatory payroll tax provide financial aid to employees who can’t work as a result of a non-work-related physical or mental disability, as well as paid family leave for eligible workers. In 2025, eligible California employees can receive an SDI benefit equal to 70-90% of their regular wages, up to $1,681 per week, or $87,412 in total. This record-level benefits boost went into effect Jan. 1, 2025, based on Senate Bill 951.
CASDI Eligibility
California’s Employee Development Department (EDD) lists employee eligibility criteria on its website. Communicate the criteria with your employees, so they understand their benefit and when they can use it. Eligibility requirements include:
- Employee can’t perform regular work for at least eight days
- Employee has lost wages because of their disability
- Is working or looking for work at the time their disability begins
- Employee has earned at least $300 with SDI deducted from their paycheck
- Employee must be a patient under a licensed health professional within the first eight days of their disability
If an employee meets eligibility criteria, they can file a disability claim online or via mail.
Employer Responsibilities
Employers are required to post and provide information regarding state disability insurance. The EDD provides free brochures and posters. In addition, the employer is responsible for withholding the appropriate amount of CASDI tax from employees’ wages and sending it to the EDD, and responding to EDD notices when an employee files a claim.
California compliance is cumbersome. Learn more about California labor law compliance in our free guide.
What is a Voluntary Plan?
If they prefer, companies that have employees in California can apply to the EDD for approval of their own private short-term disability insurance and family leave plan, called a Voluntary Plan (VP) rather than using the state’s program.
To qualify, the VP must:
- Provide identical employee benefits as the state’s program
- Provide at least one benefit that is better than what the state’s program offers
- Cost the same or less than the state’s plan
- Match the state’s yearly benefits increase
In addition, employers need written approval from the majority of employees eligible for coverage. Covered employees must be given a written document that outlines the benefit. Employees retain the right to reject the VP and choose SDI coverage.
In 2025, companies with their own programs must pay the EDD an administrative fee of 0.00168% to cover expenses.
2025 Contribution and Benefit Rates
The employee contribution rate, maximum contribution per employee, and the maximum benefit payments or amount changes on January 1 of every year.
In 2025, employees in California who are covered by SDI and PFL are required to contribute 1.2% of their wages. There’s no maximum contribution amount, as of Jan. 1, 2024.
The administrative assessment rate is calculated by multiplying the employee contribution rate by 14%, or 1.2% x 14% = 0.168%.
| Employee Contribution Rate (CA SDI Rate 2025) | 1.2% |
| Maximum Weekly Benefit Amount | $1,681 |
| Maximum Benefit Amount | $87,412 |
| Assessment Rate | 0.168% |
What is the Difference between Social Security Disability Insurance and SDI?
California’s SDI program is intended to serve as a temporary measure when an employee will be off work for a short period of time following a non-work-related injury, such as breaking a leg falling down the stairs at home. Social Security Disability Insurance (SSDI) is a federal program for permanent disability that is expected to last for at least 12 months.
Frequently Asked Questions
Read on for answers to frequently asked questions regarding SDI taxes.
What Does SDI Tax Mean?
SDI (State Disability Insurance) is a mandatory payroll deduction in certain U.S. states that funds disability insurance programs for workers. This insurance provides short-term benefits to eligible employees who cannot work due to a non-work-related illness, injury, pregnancy, or childbirth.
Which States Have an SDI Tax?
Five states have SDI Tax: California, Hawaii, New Jersey, New York, and Rhode Island.
How does California Compare to Other SDI Tax Rates?
Each state with a disability tax sets its own rates. Here are the tax rates for 2025 for each state that runs its own program:
- California’s SDI tax rate is 1.2% of SDI taxable wages, with no maximum contribution amount.
- Hawaii employers can elect to cover the insurance cost (called temporary disability insurance or TDI in Hawaii), or they can withhold up to 0.5% of an employee’s weekly wage up to a maximum of $7.21.
- New Jersey employees’ temporary disability benefits are paid for by employees and employers. In 2025, employers contribute between $43.30 and $324.75 on the first $43,300 earned by each employee during this calendar year. Employees contribute 0.23% of their wages with a maximum contribution of $380.42 per year.
- New York employers can choose to cover the cost of state disability insurance for their employees, or they can withhold 0.05% of an employee’s wages up to $0.60 per week.
- The Rhode Island Temporary Disability Insurance tax is 1.3% of the first $89,200 of an employee’s pay.
Are CASDI Taxes Refundable?
CASDI contributions are not refundable to employees unless there has been an overpayment due to an administrative error.
How Does CASDI Appear on a Paycheck?
CASDI is typically listed as a separate line item under deductions, labeled as “CASDI” or “CA SDI.”
Are CASDI Benefits Taxable?
No, CASDI benefits are generally not taxable at the state or federal level. The only exception is if SDI is paid as a substitute for unemployment insurance (UI) benefits. This could occur if a person was receiving UI benefits and then became disabled.
What is the Maximum Duration for Receiving CASDI Benefits?
CASDI benefits can be received for up to 52 weeks per claim.
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