What Is California SUI/SDI Tax?

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California's state unemployment insurance, or SUI, is an employer-paid tax. State disability insurance, or SDI, is an employee-paid tax. The employee pays for disability insurance through withholding, meaning the employer deducts the payment from his or her wages. The employer submits unemployment and disability payments to the California Employment Development Department, which administers both taxes.

Tip

California SUI covers employees should they get laid off, while SDI covers them in the event they are unable to work due to pregnancy or non-work related illnesses.

State Unemployment Insurance

California SUI tax is used to provide temporary benefits to eligible workers who became unemployed through no fault of their own, as defined by California law. An employee who lost his job due to shortage of work or a reduction in staff is usually eligible for benefits.

People who quit their jobs for no good reason or were fired for misconduct do not qualify for unemployment. A proper reason for quitting would be discrimination or unsafe working conditions. An employee who was fired because he lacked the required skills for the job should be able to collect unemployment.

State Disability Insurance

State disability insurance tax is used to provide short-term payments to employees who are unable to work due to pregnancy or a non-job related illness or injury. Employees in California must meet eligibility requirements to qualify for SDI.

For example, the employee must be unable to perform his regular job for a minimum of eight days in a row. He should also have a job or be actively seeking employment when he became disabled. The disability must be the reason for his loss of wages.

California SUI Tax Rate

Employers pay state unemployment insurance at their designated annual rate, up to the yearly wage limit. The rate is determined by the length of time the employer has been in business, the employer's industry and the amount of former employees who have claimed benefits on the employer's account.

As of the time of publication, new employers in California pay SUI at 3.4 percent for two to three years on the first $7,000 paid to each employee. Thereafter, the employer is assigned an experience rate.

Employee SDI Rate

As of the time of publication, employers withhold state disability insurance from employees' wages at one percent, up to $118,371 for the year. The most an employer can withhold per employee is $1,183.71. The rate which is subject to change yearly includes disability insurance and paid family leave.

Considerations for Unemployment and Disability

The most an employee can receive for unemployment is $450 per week, as of the publication date. Disability insurance has a maximum weekly amount of $1,252. Generally, unemployment benefits are available for up to 52 weeks and disability benefits for up to 26 weeks. Under California law, applicants cannot receive unemployment and disability insurance at the same time.

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