Effective January 1, 2024, the wage cap for SDI tax contributions in California will be eliminated. The result is that California employees will pay SDI tax on the full amount of their taxable wages each year.
This change results from legislation (CA SB 951) that was passed into law in 2022, eliminating the cap on wages for purposes of SDI tax computation.
In addition, the new SDI rate for 2024 is 1.1%, meaning employees will pay more in SDI taxes than they have in previous years on the same wages.
For example, an employee that earned $200,000 in taxable wages in 2023 would have paid SDI tax of $1,378.48 (0.9% x 153,164, the respective rate and wage limit for 2023) vs $2,200 in 2024, assuming the same taxable wage in both years.
Alternatively, an employee that earned beneath the 2023 threshold, with taxable wages of $50,000 in both 2023 and 2024, would pay $$450 in SDI tax in 2023 and $550 in 2024.
For the full text of SB 951, follow the link below.