State Disability Insurance Settings
In this article:
Background
State Disability Insurance (SDI) only applies if your business is in California, Hawaii, New Jersey, New York, or Rhode Island. These are programs set up by these states to compensate employees who are unable to work for a period of time.
California: This is a flat rate and includes both disability insurance and paid family leave. It is automatically calculated in the software, so you do not need to enter a rate. For more info, visit the California Employment Development Development website. Patriot Software calculates SDI taxes. We also deposit and file SDI taxes for Full Service Payroll customers.
Hawaii: In Hawaii, Patriot Software only calculates and deducts the full allowable amount from employee earnings, but not the employer amount. For Full Service Payroll, we do not collect and remit Hawaii SDI due to being offered through private insurance. For more info, visit the Hawaii Disability Compensation Division website.
New Jersey: Like SUTA, your SDI tax rate is based on your company’s experience. For more info, visit the New Jersey State Disability Benefits website. In New Jersey, you will need to enter your SDI tax rate. See State Disability Insurance Setup in New Jersey. Patriot Software calculates SDI taxes for both the employee and employer. We also deposit and file SDI taxes for Full Service Payroll customers.
New York: Employers have the option to deduct a portion of the cost of the tax from the employee, up to 0.5% of their wages. This is a flat rate, and automatically calculated in the software, so you do not need to enter a rate. For more info, see the New York State Insurance Fund Disability Benefits website. Patriot Software only calculates the NY SDI tax, but for Full Service Payroll, we do not collect or remit New York SDI taxes, due to being offered through private insurance.
Rhode Island: Temporary Disability Insurance (TDI) is funded entirely by employee payroll deductions. This is a flat rate, and automatically calculated in the software, so you do not need to enter a rate. For more info, see the Rhode Island Temporary Disability Insurance website. Patriot Software calculates TDI taxes. We also deposit and file TDI taxes for Full Service Payroll customers.
How to Add or Update a Company SDI Exemption
In most cases, you won’t need to change the default settings in the payroll. You only need to change your settings if either your company or an employee is exempt from SDI.
If your company is exempt from offering SDI to your employees:
- Go to Settings > Payroll Settings > Tax Exemptions by State
- Click “Add a SDI Exemption Status”
- Choose “Exempt/Not Exempt.”
- Select the effective date from the dropdown.
- Click “Save.”
How to Add or Update an Employee SDI Exemptions
If an individual employee (not the entire company) is exempt from being covered by SDI you will need to mark this on the employee’s Advanced Taxes page so the tax will not calculate.
- Go to Payroll > Employees > Employee List > Select Employee Name > Advanced Tax Settings
- Click “Edit.”
- Click “Add a SDI Exemption Status”
- On the SDI Exempt field, choose “Exempt/Not Exempt”
- Enter the effective date.
- Click “Save.”
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