In most cases, Disability Insurance (DI) benefits are not taxable. If you're like most employees in California, you have State Disability Insurance (SDI) taxes automatically taken out of your paycheck.The County of Los Angeles' (County) Long-Term Disability (LTD) Plan offers a monthly income replacement benefit if you become disabled and. Employers are mandated to deduct federal and state tax withholdings from employees based on the employee's federal withholding allowance. Download Form W-4 V: Voluntary Withholding Request from the IRS' website. Los Angeles County Employees Retirement Association. Expected duration of the medical condition. • The type of work you are capable of performing. Pay any state unemployment contributions late and you're not.