What Is SDI Payroll?

by Maggie McCormick

Employees who are injured on the job usually are eligible for Workers' Compensation benefits. A few states have an additional disability insurance program that provides coverage for people who are injured off the job. In California, it is called State Disability Insurance (SDI), and employers make withdrawals for it directly through payroll.


On your pay stub, you'll see "SDI" listed under taxes or withholdings, along with federal taxes and Social Security. SDI allows you to receive some income -- though less than your current pay rate -- during times when you are unable to work due to a temporary disability. It also allows you to receive payments when you take time off under the Family and Medical Leave Act, such as when you have a baby or must take care of a sick relative.


As of 2011, the tax rate for SDI is 1.2 percent of taxable wages up to $93,316. The tax rate or salary limit may change from year to year.

Payroll Withholdings

As an employer, you are responsible for withholding SDI money from employee paychecks. If you pay employees directly, simply withhold the amount from their check. If you use a payroll company, that company will take care of the deductions for you.


Employers are required send SDI payments along with other taxes to the Employment Development Department. The department provides tax coupons to accompany those payments. The time for filing SDI payments depends on how often you accumulate more than $500 in payroll income tax (PIT). You may have to pay the taxes the day after payroll, semiweekly, monthly or quarterly.

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