What Is CASDI on W-2 Form? Meaning and Tax Impact

Have you noticed CASDI on your W-2 form, and thought for a minute, what is it? This CASDI on W-2 form helps workers in California.

CASDI provides financial support when you, as an individual, are not able to work because of sickness or disability. According to the Employment Development Department report, the CASDI paid out $8.4 billion in benefits last year, supporting thousands of workers during tough times.

In this guide, you will get to understand everything about what is CASDI on w2 form? So, let’s dive right into it.

What is CASDI?

CASDI stands for California State Disability Insurance. It is the provisional term disability insurance program for workers in the state of California. This program is funded by the state income taxes withheld from the employees’ paychecks.

California employees who are not able to work due to a non-work-related injury or pregnancy are eligible to collect tax-free benefits until they return to work for up to one year.

Once the qualified people get their benefit payments to cease, they will begin paying into the program via the standard paycheck deductions once again. 

Why does CASDI appear on your W-2 form?

CASDI will be on your W-2 form, which will be listed on your CASDI Box 14. This shows how much CASDI tax was withheld from your paycheck during the year. Below is why it appears on your W-2 form:

• Mandatory state program: California laws require contributions to fund the disability insurance and paid family leave programs.

• Employee contribution: CASDI is a state-level payroll tax. It comes directly from the paycheck, so it should be reported on your W-2 to show how much you have paid. 

• Tax reporting: CASDI employee contribution on W-2 form is shown in box 14. It is not deducted for federal tax purposes, but you can claim it as a state deduction on your California state return.

CASDI deduction meaning

CA SDI meaning is California State Disability Insurance deduction from your paycheck, which funds a state program that provides temporary, tax-free wage replacement benefits for non-working workers due to injury or illness. 

Is CASDI taxable?

No, CASDI isn’t taxable if you’re receiving it as a substitute for unemployment insurance due to your disability. You will be receiving a Form 1099-G from the California Employment Development Department for any taxable benefits you receive.

CASDI impact on pay

CASDI has an impact on pay in two ways:

1) A portion of your paycheck is deducted to fund the program, which is shown on your paystub as state income tax.

2) If you are qualified, CASDI provides a wage replacement of around 60% when you are not able to work due to injury.

Who is eligible for CASDI?

No matter where they belong, employees who are not able to work due to non-work-related illness or pregnancy might be eligible for short-term disability insurance under CASDI.

For eligibility, one must:

• Is unable to perform their routine work for at least eight days
• You have earned at least $300 in wages during the last 12 months, from which CASDI was withheld through payroll deductions
• Have lost wages due to their disability 
• Is employed or looking for work when they apply
• Have their practitioner finish a medical certification of the disability

CA state disability insurance deduction

The CA state disability insurance deduction is a payroll tax that is withheld from an employee’s wages in California to fund the State Disability Insurance program. Below is a simple breakdown:

• What it is: CASDI funds the state disability insurance program, which provides limited wage replacement when a worker is unable to work due to illness or pregnancy
• Who pays for it: Employees in California pay for it.

You can use the paycheck stub generator to generate professional pay stubs for your business.

CASDI calculation rate 

The CASDI contribution rate is 1.1% of its gross wages in 2025. The taxable limit is $173,000 in 2025. The maximum contribution is $1,903.00.

The earnings of an employee are used to calculate CASDI. Workers are expected to fund this program with 1.2% of their income. Until the employee’s pay reaches the maximum contribution amount of $1,539.58, the sum is then subtracted from each paycheck.

Rates vary from year to year, so ensure to check the current rates before you file a tax return. If an employee is filing a claim for CASDI, the payment amount will be based on the amount they earn.

CASDI provides 60% of an employee’s paycheck until they’re able to return back to work.

Closing Thoughts

The California SDI on W2 means employees who cannot work due to injury or illness can apply for limited-term disability insurance via CASDI. With updated rates, CASDI continues to be a model for employee-focused state insurance programs. 

You can now download the W-2 forms or create the paystub by using the Stub Builder.

FAQs

1) What is CASDI on w2 form?

CASDI means California State Disability Insurance, which is a state-mandated program which gives limited disability benefits to qualified workers in California.

2) Why do I have to pay CASDI tax?

The SDI program provides temporary benefit payments to workers for non-work-related illness, injury, or pregnancy. 

3) Who is exempt from CASDI?

Most California employees are covered by SDI, but some aren’t. Those who are not covered include: Most government workers, like federal, state, county, or city employees. Some government workers are covered by Non-Industrial Disability Insurance (NDI).

4) How long does the CASDI benefit last?

Disability Insurance provides short-term wage replacement benefits to eligible California workers. The most you can receive is 52 weeks of DI benefits for your own non-work-related illness, injury, or pregnancy. Your disability must also be certified by a practitioner.

5) Can I work while on CASDI?

Yes. You can receive benefits intermittently while working part-time as long as you continue to meet the other eligibility requirements.