California SDI, or State Disability Insurance, is a payroll deduction of 1.3% of an employee's wages in 2026, withheld by the employer and paid to the EDD. It funds short-term Disability Insurance and Paid Family Leave benefits, and since January 1, 2024 there's no wage cap, so every dollar of wages is subject to it.
The Employment Development Department (EDD) runs SDI. This guide uses the EDD's contribution rates page, its tax-rated employers page, the DE 3395 table of rates and wage limits, and its Disability Insurance pages, all read in October 2026. It explains the payroll side and the benefit rules, not health questions.
SDI in numbers for 2026
| Item | California (as of October 2026) |
|---|---|
| SDI withholding rate | 1.3% of wages |
| Taxable wage limit for SDI | None since January 1, 2024 |
| Weekly Disability Insurance benefit range | $50 to $1,765 |
| Longest Disability Insurance claim | 52 weeks |
| Benefit as a share of past wages | 70 to 90% |
How the 1.3% rate is set
The EDD says the SDI withholding rate is the same for every employee and is calculated each year under section 984 of the California Unemployment Insurance Code. It's based on the balance in the SDI Fund and on the amount paid out and wages paid. Employers can't protest the SDI rate, unlike the unemployment insurance rate on the same yearly notice.
Here's the change many payroll set-ups missed. Until the end of 2023, SDI stopped once an employee hit a yearly wage ceiling. The EDD says that from January 1, 2024 all wages are subject to SDI, with no taxable wage limit and no maximum withholding per employee. A high earner now pays 1.3% on every dollar, all year.
SDI is withheld, not paid on top
SDI is a withholding from the employee's pay, which is why the EDD calls it a withholding rate. That makes it different from the employer-paid taxes on the same notice. For 2026 the EDD lists:
- Unemployment Insurance (UI): new employers are assigned 3.4% for two to three years, on the first $7,000 of each employee's wages. The 2026 schedule runs from 1.5% to 6.2%.
- Employment Training Tax (ETT): 0.1% on the first $7,000 per employee for employers with a positive UI reserve balance.
- SDI: 1.3% of all wages, withheld from employees.
The EDD mails the combined rate notice, form DE 2088, in December. My unemployment insurance guide explains how UI works across states.
What SDI pays for
The EDD describes SDI as one programme with two benefits: Disability Insurance (DI) and Paid Family Leave (PFL), both short-term wage replacement for eligible workers who need time off. DI covers time off work due to a non-work-related illness or injury, pregnancy or childbirth, among other reasons the EDD lists. Work injuries are a separate system, workers' compensation.
Disability Insurance benefits in brief
- Benefits range from $50 to $1,765 a week, for up to 52 weeks.
- The weekly amount is 70 to 90% of the wages earned 5 to 18 months before the claim start date.
- The worker must be unable to do their regular work for at least eight days.
- A physician or practitioner must certify the claim.
- There's no minimum number of hours or days worked to qualify, and part-time or reduced-hours workers may still qualify.
- Once a complete application and certification arrive, the EDD says processing takes about two weeks.
The EDD also has a Disability and Paid Family Leave calculator for estimating a benefit amount.
SDI doesn't protect the job
This is the point employees most often misunderstand. The EDD says plainly that Disability Insurance benefits don't provide job protection. Job protection may come from other laws, such as the federal Family and Medical Leave Act or the California Family Rights Act. So an employer handling a leave needs to look at both: SDI replaces part of the pay, and leave laws decide whether the job is held open. My FMLA guide covers the federal side, and the California sick leave guide covers paid sick days.
Self-employed? SDI is optional
Sole owners and independent contractors don't have SDI withheld, but they can opt in through Disability Insurance Elective Coverage. The DE 3395 table explains how the wages used for elective coverage are worked out: the greater of $1,150 a quarter or 25% of the profit reported on IRS Schedule SE for the prior tax year. For 2026, that's based on 2024 profit reported on a 2024 Schedule SE filed in 2025.
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Common SDI payroll mistakes
- Leaving an old yearly SDI ceiling in payroll software, so withholding stops partway through the year for higher earners.
- Treating SDI as an employer cost and paying it on top instead of withholding it.
- Mixing SDI up with the UI rate, which is employer-paid, varies by employer and can be protested.
- Telling a worker on Disability Insurance that their job is automatically protected, when that depends on leave laws.
If you run payroll yourself, it's worth checking one payslip for a high earner late in the year. If SDI has dropped to zero, the old ceiling is still switched on.
Payroll checklist for California employers
- Set SDI withholding at 1.3% for 2026 on all wages, with no cap.
- Remove any old SDI wage ceiling from your payroll settings.
- Check the new rate when the EDD publishes the next year's figures.
- Keep SDI separate from the employer-paid UI and ETT in your books.
- Tell staff where to apply for DI or PFL, and that job protection comes from leave laws.
My verdict
SDI is a 1.3% deduction from every California paycheck in 2026, with no ceiling since 2024. For employers it's a withholding job, not an extra cost, but the cap removal is the detail to check in your payroll settings. For staff, it's a short-term pay safety net, worth up to $1,765 a week as of October 2026, that sits alongside leave laws rather than replacing them.
Frequently asked questions
What is the California SDI rate for 2026?
The SDI withholding rate for 2026 is 1.3% of wages, the same for every employee.
Is there a wage limit for California SDI?
No. Since January 1, 2024 all wages are subject to SDI, with no taxable wage limit or maximum withholding.
Who pays California SDI?
Employees. SDI is withheld from employees' wages by the employer, unlike UI and ETT, which employers pay.
How much does California Disability Insurance pay?
Between $50 and $1,765 a week for up to 52 weeks as of October 2026, at 70 to 90% of wages earned 5 to 18 months before the claim.
Can employers protest the California SDI rate?
No. The EDD says the SDI rate is set by law each year and can't be protested, unlike the UI rate.
Can self-employed people get California SDI?
Yes, through Disability Insurance Elective Coverage, which they choose to join.
