State Disability Insurance Setup in New Jersey
Background
The state of New Jersey requires that all business covered by unemployment compensation law are also required to provide coverage for State Disability Insurance (SDI). This is paid by both employees and employer through a payroll tax. As an employer, you can choose to have a private insurance plan or the state plan. Your state disability insurance (SDI) tax rate is based on your claims experience. You will receive a tax notice (the same notice as your unemployment insurance rate) with the contribution rate for your business. Click here for a sample tax notice. SDI taxes are reported and paid on the same report as New Jersey Unemployment. If you are a Full Service Payroll customer, we will collect and remit this tax for you if you use the state plan.
See our state guide New Jersey New Employer Information for tax rates for new businesses.
For more info, visit the New Jersey State Disability Benefits website.
To set up Your New Jersey Disability Insurance Rate in Patriot Software
As a new payroll customer setting up your account in the Payroll Wizard, you will be asked to enter both your SDI and SUTA tax rates. To update your rates later, go to:
- Settings > Payroll Settings > State Unemployment Rates
- Click Edit in the “New Jersey Employer SDI” section
- Enter the effective date of the tax rate
- Enter the tax rate
- Click Save
Similar to unemployment rates, a history of your old rates will be kept as you update your SDI rate each year.
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