SDI Tax | Meaning and Definition

What is SDI Tax? 

The SDI tax stands for State Disability Insurance Tax and aims to provide financial assistance to disabled individuals who are not directly related to their profession. California is the only state that helps financial assistance to the disabled in the form of SDI tax. Other than California, many states have TDI (Temporary Disability Insurance) that works similar to the SDI tax. It is also to be noted that the SDI tax will be paid to the qualified individual via employee payroll and not like the compensations or benefits offered to the employees in the organizations.

Five states provide the TDI (Temporary Disability Insurance) plan to qualified individuals. California (SDI tax), New Jersey, Rhode Island, New York, and Hawaii.

Let us now explore the calculation of SDI tax. The current SDI taxation rate for each state that might be either SDI program or TDI program is explained below:

Ø  California charges the highest tax rate out of other states. The withholding rate of SDI tax is 1.10%, and the taxable threshold is $145,600. The taxable threshold per employee per annum will be $ 1,601.60.

Ø  The highest tax rate in Rhode Island is 1.10% but with a low threshold. The taxpayers have to pay $81.500 per annum.

Ø  The withholding rate in New York is 0.5%

Ø  The withholding rate of TDI tax in New Jersey is 0.14% (which is unbelievably low), but the threshold taxation is $151 900 (relatively high).

Ø  The withholding rate in Hawaii for the employees is 0.5% of their weekly wage.

Get 20% off
HR & Payroll Software