What Is CASDI? A Simple Guide for Employees

CASDI is short for California State Disability Insurance, and it’s a state-level program that provides financial assistance to eligible workers in need. Many employees in California see this as an item on their pay stubs and don’t know what it is. Simply put, it’s a mandatory tax used to fund the program.

This article will show you everything you need to know about the CASDI tax and the program it funds. You’ll learn who has to pay CASDI, what it covers, and how it compares to other payroll deductions in California.

Key Takeaways

• CASDI stands for California State Disability Insurance, and it’s a tax-funded program that provides financial assistance to workers with temporary disabilities.
• CASDI tax is a mandatory payroll tax that employers withhold from employees’ paychecks.
• The tax funds two specific programs, which are State Disability Insurance (SDI) and Paid Family Leave (PFL).
• The tax rate changes annually, and it’s 1.20% of the employee’s gross salary in 2025, with no CA SDI taxable wage limit.

What Is California State Disability Insurance (CASDI)?

California State Disability Insurance (CASDI or CA-SDI for short) is a state-funded program implemented to give short-term financial assistance to workers with temporary disabilities. Individuals are eligible for this program if they are temporarily unable to work due to reasons like non-work-related illnesses or injuries, as well as pregnancy.

CASDI is administered by the California Employment Development Department (EDD), which uses the tax to fund the program. CA-SDI tax is a mandatory payroll tax used to fund two state-specific programs:

1. State Disability Insurance (SDI)
2. Paid Family Leave (PFL)

In essence, CASDI acts as a safety net for workers to help them maintain financial stability when they are temporarily unable to earn income. It gives the worker a portion of their gross wages over a specified period of time to help them overcome the hardship.

The tax that funds the program is automatically taken out of the employee’s paycheck by the employer and sent directly to the state.

Who Has to Pay CASDI?

Almost every employee who works in California has to pay CASDI. The tax is automatically deducted from their paychecks, since employers are legally required to withhold it and send it to the state on the worker’s behalf.

If you’re an employee in California, you’ll likely find this tax in the “Deductions” or “Taxes” section on your pay stub. It will usually be listed as “CASDI,” “SDI,” or even “CASDI-E” (CASDI, Employee contribution), and it will show the exact amount that’s been taken out of your paycheck to fund the program.

It’s important to note that there are specific types of workers who are exempt from paying this tax. These include:

• Self-employed professionals
• Elected officials and members of a legislative body
• Election campaign workers
• Employees of a church or convention
• Federal employees
• Patients employed by the hospital in which they are patients
• Salespersons in certain fields

If you’re a self-employed professional, small-business owner, or independent contractor, you can voluntarily opt into the Disability Insurance Elective Coverage (DIEC). This is another EDD disability insurance program and represents an alternative method of benefiting from SDI or PFL when you aren’t a traditional employee.

What Does CASDI Cover?

In general, CASDI covers two main areas: State Disability Insurance and Paid Family Leave. Both programs are meant to provide short-term financial benefit to individuals who can’t work, but they don’t represent job protection. Also, each program serves a distinct purpose, so let’s find out more about them.

State Disability Insurance (SDI)

State Disability Insurance (SDI) covers you when you’re unable to perform in your position due to a non-work-related disability. This includes an illness or injury that occurred outside the workplace, pregnancy, and childbirth.

To be eligible for disability insurance benefits, you typically need to fulfill the following requirements:

• You’ve been unable to work due to a disability for at least eight days.
• You’ve lost wages and also earned at least $300 after paying SDI tax during your base period (a 12-month period prior to your claim).
• You’re either employed or actively looking for work.

If you meet these criteria, you may receive benefit payments for up to 52 weeks.

The exact Weekly Benefit Amount (WBA) varies and primarily depends on your annual income. In general, you can expect to receive anywhere between 70% and 90% of the wages you earned in a period of 5–18 months before your claim.

Paid Family Leave (PFL)

Paid Family Leave (PFL) is developed to provide financial support to individuals who need to take time off work to care for their family.

The eligibility criteria for paid family leave in California are similar to those for SDI. You can apply for PFL if you:

• Are unable to work.
• Lost wages due to caring for an ill family member, bonding with a child, or supporting an eligible US Armed Forces member in your family who’s deploying to a foreign country.
• Are employed or are actively looking for a job.
• Earned at least $300 after having CASDI withheld from your paycheck during your base period.

If you’re eligible, you can receive PFL payments for up to eight weeks within one year.

How Much Do Employees Pay for CASDI?

How much employees pay for CASDI depends on the tax rate set by the state of California. The tax rate is used to calculate how much of an employee’s earnings will be withheld from their paycheck.

The rate is adjusted annually, and in the last three years it was:

It’s important to note that, up until 2023, there was a taxable wage limit of $153,164, which meant the maximum annual tax was $1,378.48. However, that limit was removed in 2024 due to legislative updates meant to expand the program funding, so the contributions aren’t capped any longer.

As a result, the California disability tax is now calculated as a percentage of the employee’s entire gross salary, regardless of how much they earn. This means that high earners are now seeing much higher figures for CASDI deductions on their paychecks.

CASDI taxes are withheld each pay period. Withholding depends on the payroll schedule, and typically occurs weekly, biweekly, or monthly.

CASDI vs. Other California Payroll Deductions

It’s important to distinguish between CASDI and other California payroll deductions, as each comes with different rates and serves a distinct purpose. Considering pay stubs can be crowded with acronyms, knowing what each means can help employees understand their finances better.

One common mix-up is between CASDI and CA PIT taxes. CA PIT (sometimes listed as just “PIT” on a pay stub) stands for California Personal Income Tax. This is a standard state income tax that’s withheld from an employee’s paycheck and used for general funds, schools, roads, and similar purposes. It’s not related to CASDI and doesn’t provide insurance benefits.

FICA taxis another acronym for the type of payroll tax that may cause confusion. It stands for the Federal Insurance Contributions Act, and it consists of Social Security and Medicare taxes. While CASDI is strictly a state tax, FICA is governed on a federal level.

Lastly, there’s the UI (or SUI/CA SUI) tax, which is the state unemployment insurance tax. This tax is paid entirely by the employer. It’s calculated as a percentage of the first $7,000 the employee earns in a year. The tax rate and the taxable amount are subject to change by the state.

Here is a comparison table that outlines the key differences between these taxes:

Can You Opt Out of CASDI?

Most employees can’t opt out of CASDI. If you’re a traditional employee (a W-2 worker) at a private company in California, you’re legally required to pay this tax, and it will appear on your pay stub as a deduction item labeled SDI or CASDI. Even if you decide to pay for private insurance, you still have to contribute to the California state disability program.

However, some exempt categories of workers don’t have to pay CASDI tax, like the previously mentioned elected officials, church and federal employees, and self-employed professionals.

Self-employed individuals (freelancers, contractors, gig workers) are exempt from paying CASDI by default, since they aren’t employees. On the other hand, they can opt in through the voluntary DIEC program.

Finally, there is one way for employers to opt out of CASDI, and that is if they offer a private Voluntary Plan (VP) instead. To achieve this, the VP must offer the same or better benefits than SDI, while having a lower or equal contribution rate for employees. Also, the employees get to choose if they want the VP or CASDI coverage.

Record and Track CASDI With Paystub.org

Since most employees don’t know how CASDI is calculated, Paystub.org developed a professional and user-friendly pay stub generator you can use to create accurate documentation in minutes.

The tool automatically adjusts the contents of your pay stubs to include CASDI (and other relevant items) when you choose California as the state. The generator adds the rates and multiplies them by your inputs, helping you calculate gross and net pay, earnings, and deductions. You can also use our Form W-2 generator to prepare year-end tax documentation for your employees.

If you need additional help with billing clients or tracking payments made to contractors, we have an invoice generator and a Form 1099 generator.

Final Thoughts

CASDI is an important program that allows workers in California to receive much-needed financial assistance during periods of illness, injury, pregnancy, or family caregiving. While the tax as a deduction from your paycheck can be confusing, you can rest assured knowing that you’re covered in periods of need.

This knowledge will help you maintain clean and accurate records, run your business, or control your finances, either as an employer or an employee. By being aware of the rates and the recent removal of the wage cap, employees will also know how much of their pay goes toward funding the program and how they can benefit from it.

What Is CASDI FAQ

#1. Does CASDI reduce my taxes?

CASDI can reduce your taxes if you itemize deductions on Schedule A. While it doesn’t directly reduce your tax liability, CASDI contributions can be deductible as part of your State and Local Income Taxes (SALT).

#2. Does maternity leave fall under CASDI?

Yes, maternity leave falls under CASDI. It is covered by both State Disability Insurance (SDI), typically 4 weeks before and 6–8 weeks after birth, as well as Paid Family Leave (PFL) afterward, for spending time to care for and bond with the baby.

#3. What happens if I move out of California?

If you move out of California, you may still receive the benefits in the case of a qualifying event while you’re still eligible. Moving away doesn’t immediately make you ineligible, and you can claim the benefit online, regardless of where you currently live.

#4. Are CASDI benefits considered taxable income?

Whether CASDI benefits are considered taxable income depends. SDI benefits are not taxable, unless you begin receiving them while also receiving unemployment benefits. In that case, you’ll receive Form 1099G, and the benefits will be taxable on your federal return. PFL benefits are always taxable on your federal return.

#5. How do I file a CASDI claim?

The easiest way to file a CASDI claim is online, using the EDD website. You need to gather the required information, make a myEDD account, register for SDI, and file your claim. Then, you can direct your licensed health professional to your online claim to complete the medical certification.