What is a State Disability tax (SDI taxes)?

State disability insurance taxes (SDI taxes) are taxes that employers pay on the wages of their employees, these taxes are paid simultaneously with the federal income tax.

SDI taxes are paid by employers on behalf of the employees and are withheld from employees’ paychecks, The money from an SDI tax in California is put into a state disability insurance program that provides financial assistance to workers who lose the ability to work due to physical or mental disability not directly related to their profession.

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SDI taxes help to ensure that disabled workers have access to much-needed income replacement and medical benefits, it also helps to protect employers from the potentially high costs of disability claims. In some cases, SDI taxes may also be used to fund state-level programs that provide training and support services to disabled workers.