California SDI tax is a small payroll deduction that funds disability and family leave benefits

State Disability Insurance (SDI) tax is a mandatory deduction from your California paycheck. The state uses the money you and your employer contribute to pay benefits when you cannot work because of a non-work injury, illness, or pregnancy—or when you need to take time off to care for a family member. Unlike federal income tax or Social Security, SDI is specific to California and exists solely to fund these temporary leave programs.

The tax rate changes each year. For 2024, employees pay 1.0% of wages up to a state-set maximum (the taxable wage base), and employers pay a separate rate into the same fund. You will see "SDI" or "CASDI" listed as a deduction on your pay stub. The amount is small—typically a few dollars per paycheck for most workers—but it adds up across the year to create a pool the state draws from when you file a claim.

Key Takeaways

  • SDI tax is deducted from your California paycheck and funds temporary disability and family leave benefits, not a savings account in your name.
  • The 2024 employee rate is 1.0% of wages up to the state maximum; the rate and maximum change annually.
  • You become covered automatically once you start working in California—there is no separate enrollment or registration step.
  • SDI covers non-work injuries and illnesses, pregnancy and childbirth recovery, and time off to care for a family member with a serious health condition.
  • Benefits are temporary and replace a portion of your lost wages, not your full salary.

How the SDI tax rate is set each year

The California Department of Industrial Relations sets the SDI tax rate annually based on the balance in the Disability Insurance Fund. If the fund has enough money to cover expected claims, the rate may stay the same or decrease. If claims are rising or the fund balance is low, the rate increases. The state also adjusts the maximum taxable wage base—the highest amount of your income subject to the tax—each year.

For example, in 2024 the maximum taxable wage base is $153,164, meaning you pay SDI tax only on income up to that amount. If you earn $200,000, you pay SDI on $153,164 and nothing on the remaining $46,836. The state publishes the new rates and wage base in November or December for the following year, so you can see the change coming on your January pay stub.

What SDI tax covers: disability, family leave, and pregnancy

SDI benefits are available for three main situations. Temporary Disability Insurance (TDI) covers you if you cannot work because of an injury or illness that is not work-related—a car accident, surgery recovery, or a serious illness. Paid Family Leave (PFL) lets you take time off to bond with a newborn or newly adopted child, or to care for a family member with a serious health condition. Pregnancy-related disability covers the period before and after childbirth when you cannot work due to the pregnancy itself.

These are not the same as workers' compensation (which covers work injuries) or unemployment insurance (which covers job loss). SDI is narrower: it pays a portion of your wages when you are temporarily unable to work for specific personal or family health reasons. The benefit replaces roughly 55% to 60% of your average weekly wage, up to a state maximum that changes each year.

Who pays into SDI and who is covered

Employees in California pay the employee portion of SDI tax automatically—it comes out of your paycheck with no action needed on your part. Most employers also pay a separate employer SDI tax into the same fund. Some employers in California carry private disability insurance instead of paying into the state fund; if your employer does this, you will not see SDI on your pay stub, but you are still covered under a private plan that meets state requirements.

You are covered as soon as you start working in California, regardless of how long you have been at your job or how many hours you work. Part-time workers, full-time workers, and gig workers (if they meet certain conditions) can all draw SDI benefits. There is no waiting period to become covered, and you do not need to enroll or register separately—the tax deduction itself is your enrollment.

The difference between SDI tax and what you receive in benefits

It is important to understand that SDI tax is not a personal savings account. You do not build up a balance that belongs to you. Instead, all the tax money goes into a shared state fund, and when you file a claim, the state pays benefits from that pool. If you never file a claim, you do not get that money back—it goes to pay other workers' benefits.

The benefit you receive if you do file a claim is also temporary and partial. SDI replaces a percentage of your lost wages for a limited time—usually up to 4 weeks for regular disability, up to 8 weeks for pregnancy-related disability, and up to 12 weeks for family leave (or up to 16 weeks in some cases). You must meet the state's definition of unable to work, and you must have earned enough in the base period (usually the four calendar quarters before you file) to may have access to for any benefit at all.

How to find your SDI tax rate and wage base

Your pay stub will show the SDI deduction for that pay period. To see the current year's rate and maximum wage base, visit the California Department of Industrial Relations website or the Employment Development Department (EDD) website. Both agencies publish the rates in the fall for the coming year. You can also call the EDD at 1-888-209-8124 to ask about the current rate.

If you think your SDI deduction is wrong—for example, if you have already hit the maximum wage base but SDI is still being deducted—contact your payroll department first. If they cannot explain it, you can file a wage claim with the state labor commissioner, though this is rare. Most deductions are correct; the issue is usually a misunderstanding of how the wage base works.

Frequently Asked Questions

Can I opt out of paying SDI tax?

No. SDI tax is mandatory for all California employees. You cannot choose not to pay it, and your employer cannot waive it. The only exception is if your employer carries a private disability insurance plan approved by the state; in that case, you pay into the private plan instead of the state fund, but you still pay something.

What happens to my SDI tax if I leave California?

Once you stop working in California, you stop paying SDI tax. If you have already paid into the fund and later file a claim while living out of state, you may still be able to draw benefits if the claim is for a disability that began while you were working in California. Contact the EDD to ask about your specific situation.

Is SDI the same as Social Security Disability?

No. Social Security Disability Insurance (SSDI) is a federal program for people with long-term or permanent disabilities. SDI is a California state program for temporary disabilities. They are separate systems with different rules, benefit amounts, and may be able to access requirements. You can potentially receive both, but they do not replace each other.

Do self-employed people pay SDI tax?

Self-employed workers in California can choose to pay into SDI and become covered, but it is not automatic. You must register with the EDD and pay both the employee and employer portions. Some self-employed people do this; others carry private disability insurance instead. Check the EDD website for current rules and rates for self-employed workers.

Can my employer deduct SDI from my paycheck without telling me?

No. Your employer must show SDI as a separate line item on your pay stub so you can see it. If you do not see it listed and you work in California, ask your payroll department. They should be able to explain whether you are in the state SDI program or a private plan, and show you the deduction.