CASDI, or CA-SDI, stands for California State Disability Insurance.
Employees who can’t work because of a temporary non-work-related illness or injury can apply for short-term disability insurance through CASDI.
The state disability insurance program (SDI program) allows California employees to collect weekly, tax-free benefits until they’re ready to return to work or until their benefits expire (for up to 52 weeks or the amount in their taxable wage base period, whichever is less). The California SDI benefit payments are equal to around 60 to 70 percent of an eligible worker’s average gross income in a quarter. (Note: They aren’t taxable by the Internal Revenue Service (IRS), unless those benefits are received when an individual is already collecting unemployment benefits.)
Employees pay for the program through a state income tax that’s withheld from each paycheck. (Tip: Many small business payroll providers can automatically handle CASDI deductions for employers.)
The amount withheld will appear on an employee’s pay stub as “CASDI-E,” which stands for “California State Disability Income tax; Employee contribution.” It’s usually listed in the deductions section of a pay stub.
Keep reading to learn the basics of the CASDI tax, and what your responsibilities are as an employer in California.
Who pays for CASDI?
Employees pay for CASDI—not employers.
As a California employer, you deduct the CASDI payroll taxes (as well as California Paid Family Leave) from each employee’s wages each pay period. If you use an online payroll service, it can usually take care of deducting the SDI tax for you.
When employees fill out information for CASDI on their W-2 form, they must enter the dollar amount withheld in Box 14. This allows them to claim it as an itemized deduction for state and local income taxes. The amount will be subtracted from their adjusted gross income to lower their total tax bill.
What is the CASDI tax rate for 2023?
According to the State of California Employment Development Department (EDD), the employee contribution rate (or SDI rate) in 2023 is 0.9 percent of an employee’s taxable wage per year, down from 1.1 percent in 2022. The maximum weekly benefit amount is $1,620, up from $1,540 in 2022.
Maximum tax amount: In 2023, you’ll need to withhold the CASDI tax from wages per employee up to $153,164 every calendar year, which is up from $145,600 in 2022.
| 2022 | 2023 | |
|---|---|---|
| Employee contribution rate | 1.10% | 0.90% |
| Maximum contribution (per employee) | $145,600 | $153,164 |
| Maximum weekly benefit (MWB) | $1,540 | $1,620 |
| Maximum benefit amount (MWB x 52) | $80,080 | $84,240 |
Who is eligible for CASDI?
No matter their citizenship or immigration status, employees who are unable to work due to a non-work-related illness, injury, or pregnancy may be eligible for short-term disability insurance under CASDI.
For eligibility, an employee must:
- Be unable to perform their regular work for at least eight consecutive days
- Have earned at least $300 in wages during the previous 12 months, from which CASDI was withheld through payroll deductions
- Have lost wages due to their disability
- Be employed or looking for work when they apply
- Be under the care of a licensed physician, practitioner, or religious practitioner during the first eight days of their disability
- Make the claim within 49 days of the date the disability started and no earlier than nine days
- Have their physician or practitioner complete a medical certification of the disability.
Employees can apply through the SDI online portal on California’s EDD website by creating an EDD login.
Are independent contractors eligible for CASDI?
If you or your worker is self-employed or work as an independent contractor, you have the option of paying into the EDD’s Disability Insurance Elective Coverage (DIEC) program.
This program provides disability insurance and paid family leave coverage when you aren’t required to pay into state disability insurance (SDI). You pay for coverage through quarterly premiums.
For more information, visit the DIEC Forms and Publications page.
What are my CASDI responsibilities as an employer?
As an employer, you don’t pay for CASDI. However, you do need to withhold and send employee contributions to the EDD.
You’ll also need to give employees certain information about the laws and regulations related to employment, benefits, and working conditions. This includes posting and providing the following:
- Notice to Employees: Unemployment Insurance/Disability Insurance/Paid Family Leave (DE 1857A): This poster lists an employee’s right to claim UI, DI, and PFL benefits. If your employees aren’t covered by UI, you need to post the Notice to Employees (DE 1858).
- Disability Insurance Provisions (DE 2515): Give this brochure to new hires and anyone who asks for time off due to a non-work-related illness, injury, pregnancy, or childbirth.
- Paid Family Leave Benefits (DE 2511): Give this brochure to new hires and anyone who asks for time off to bond with a new child or to care for a seriously ill family member.
You can order these free posters and brochures through the EDD’s Online Forms and Publications page or by calling 1-800-480-3287. Or you can download and print DI Forms and Publications and PFL Forms and Publications.
When an employee files a claim, you’ll need to respond to the following:
- Notice to Employer of Disability Insurance Claim Filed (DE 2503): You’ll receive this form after an employee files a DI claim. You must complete and return it to the EDD within two working days using either SDI Online or the paper form to verify the information on the employee’s claim.
- Notice of Paid Family Leave (PFL) Claim Filed (DE 2503F): You’ll receive this form after an employee files a PFL claim. You need to complete and return the paper form to the EDD within two working days to verify the information on the employee’s claim.
If you have employees working in San Francisco: You may be required to supplement wages if an employee receives PFL benefits for bonding with a new child through birth, adoption, or foster care placement.
Visit the EDD’s PFL employers’ page for more information.
Can my company opt out of CASDI?
You can opt out of CASDI and create a private plan for voluntary disability insurance (known as a voluntary plan) if you meet certain requirements.
A voluntary plan must:
- Provide all the benefits of SDI
- Include at least one benefit that is better than SDI
- Not cost employees more than SDI
- Be approved by a majority of your employees before it goes into effect
The primary benefit of a voluntary plan is that it lets you provide employees with better coverage at, potentially, no additional cost. If your employees have a low claim rate, you can use the extra contributions to provide higher benefits or to underwrite a lower contribution rate.
To be approved, you need to post a security deposit with the EDD to guarantee that the voluntary plan meets all of the requirements.
For information on security deposits, reporting requirements, and disputing claims, read the Disability Insurance Employer’s Guide to Voluntary Plan Procedures (DE 2040).
Now you have a better understanding of CASDI and exactly what goes in—and out—of your employees’ paychecks.