CA SDI 2024

California Increases SDI Deduction

Changes are coming to California State Disability Insurance (SDI) as Senate Bill 951 removed the taxable wage limit and maximum withholdings for each employee subject to SDI contributions.

Before January 1, 2024, the State Disability Insurance (SDI) had a wage cap indexed by the state. This wage cap meant that only a portion of an employee's wages, up to $153,164 (as of 2023), were subjected to SDI taxation, and the maximum amount that could be withheld from each employee was $1,378.48. However, starting in 2024, this wage cap will be eliminated, and all wages subject to SDI taxation will be taxed at a rate of 1.1%.

Implications for Employers 

It is the responsibility of employers to ensure that their team members are kept up to date with the latest changes in employment laws and benefits. Companies must inform their employees about any upcoming changes in payroll withholding, especially as they prepare to modify the amount of SDI withholding they will send to the Employment Development Department (EDD). It is important to note that the removal of the wage cap means that higher-earning employees will now be subject to increased withholding, which may impact their overall take-home pay and financial planning. 

About California's Short-Term Disability Program

California SDI is a state-run program that provides partial wage replacement to employees who are unable to work due to a non-work-related illness, injury, or pregnancy. California employers are legally required to withhold and send SDI contributions to the California EDD. Ongoing changes to the program may present some challenges for employers and employees, but they also bring potential benefits. The elimination of the wage cap means that as early as 2025, employees may have access to more SDI benefits if they cannot work due to a covered condition. This can provide more financial support during times of illness or injury.

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This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

California Increases SDI Deduction up to speed on the latest changes in California State Disability Insurance (SDI) and understand their implications. Learn about wage caps, taxation rates, withholdings, and more!2023-11-27T18:00:00-05:00Get up to speed on the latest changes in California StateDisability Insurance (SDI) and understand their implications. Learn about wage caps, taxation rates,withholdings, and more!Employee ManagementHRIS SolutionsPayroll ServicesTax ReformYes