The SDI withholding rate for 2025 is 1.2 percent. Effective January 1, 2024, all wages are subject to SDI contributions.The amount of federal, state and other income taxes withheld from the employee's paycheck during the calendar year is reported on the Form W-2. Payments must be sent to the State Disbursement Unit within 7 (seven) days of the date of withholding. Complete instructions are included with every IWO. Property tax exemptions are available for schools, museums and other organizations that provide services to the entire community. Claims must be filed annually. Retirement allowances (including disability retirement) are generally considered taxable income under both federal and State of California income tax laws. The process of investigating claims may take up to 90 days during which no disability benefits would be paid. These taxes are also called SDI contributions. Example.