The TDI tax on your paystub is a state-level payroll deduction that funds Temporary Disability Insurance, a program that replaces part of your wages if a non-work-related illness or injury keeps you from working. It exists in only six U.S. jurisdictions, so most workers never encounter it. If you do, the money goes into an insurance pool you can draw on later when you need it.
Where the TDI Tax Applies
Only California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico require TDI.1U.S. Department of Labor. Temporary Disability Insurance Your work location controls, not where you live. A New Jersey resident who commutes into New York pays into New York’s system. A remote worker paid through a California employer generally pays into California’s.
The programs are structured differently under the hood. California and Rhode Island run state funds financed mainly by employee deductions. New Jersey and Puerto Rico use state funds but let employers substitute an approved private plan. Hawaii and New York were built around employer-arranged coverage from the start, whether through a commercial carrier, a self-insured plan, or (in New York) the State Insurance Fund.2Social Security Administration. Annual Statistical Supplement – Temporary Disability Insurance Program Description and Legislative History Those structural choices are why the deduction looks so different from one state to the next.
How Much Comes Out of Your Pay
Every TDI jurisdiction applies a percentage rate to your wages, but the rate, the wage base, and who bears the cost vary widely. For 2026:
- California employees pay 1.3% of all wages. There is no taxable wage ceiling. The state eliminated its cap in 2024, so the rate applies to every dollar you earn.3Employment Development Department. Contribution Rates and Benefit Amounts
- New Jersey employees pay 0.19% on the first $171,100 in wages, capping the annual TDI contribution at $325.09.4Division of Temporary Disability and Family Leave Insurance. Information for Employers
- New York employees can be asked to contribute up to 0.5% of weekly wages, but the deduction is capped at $0.60 per week. The employer covers the rest of the premium.5New York State Workers’ Compensation Board. Disability Benefits and Paid Family Leave Insurance
- Hawaii employers must provide coverage and may split the cost with employees, but the employee share cannot exceed 0.5% of weekly wages.6State of Hawaiʻi. About Temporary Disability Insurance
- Rhode Island funds the program entirely through employee deductions. The state publishes its rate and taxable wage base before each calendar year.7RI Department of Labor & Training. TDI / TCI For Employers
The math itself is simple. Multiply your gross wages for the pay period by the decimal rate. A $1,000 paycheck in New Jersey generates a $1.90 TDI deduction. In California, that same paycheck produces a $13 deduction, and it keeps going all year because there’s no cap.
Who Actually Pays
The funding split explains why the line item is invisible on some paystubs and obvious on others. Three patterns show up across the six jurisdictions.
In Rhode Island, the full cost comes out of the worker’s pay. California and New Jersey follow a similar employee-funded model for their state programs, though employers can substitute an approved private plan.7RI Department of Labor & Training. TDI / TCI For Employers Hawaii lets employers split the premium roughly evenly with employees, with the worker’s share capped at 0.5% of weekly wages.6State of Hawaiʻi. About Temporary Disability Insurance New York is the opposite: the employer must carry the coverage and can pass along at most $0.60 per week to employees, absorbing the rest.8New York State Insurance Fund. DB Standard Premium Rates
So the deduction on your paystub can run from a few pennies a week in New York to a substantial monthly amount for a higher earner in California.
What the Tax Actually Buys You
TDI replaces a portion of your wages when a non-work-related illness or injury keeps you from doing your job. That boundary matters. A back injury from lifting boxes at work falls under workers’ compensation, not TDI. A back injury from a weekend hike is what TDI covers.
Benefits are calculated as a percentage of your recent earnings. Each state sets its own formula, its own maximum weekly payment, and its own duration cap. Maximum weekly benefits across TDI states range from roughly $170 to over $1,700, and payments generally last up to 26 weeks, though some conditions qualify for longer. You typically need medical certification from your treating physician confirming the disability and its expected duration to file a claim.9Employment Development Department. Disability Insurance and Paid Family Leave – Forms and Publications
Most states impose a short waiting period, usually around seven days, before payments begin. In New Jersey, you can file on the first day of disability, but there’s an unpaid gap before benefits start.10Division of Temporary Disability and Family Leave Insurance. FAQ – Temporary Disability Insurance
In some states the same payroll deduction also funds a Paid Family Leave benefit you can draw on for bonding or caregiving, which is a separate program from TDI proper.
Reading TDI on Your Paystub
The label depends on the state and the payroll system. California typically shows “CASDI” or “CA SDI.” New Jersey uses “NJ TDI” or “NJ DI.” New York often prints “NY DBL” (for Disability Benefits Law) or “NY SDI.” Hawaii stubs commonly show “HI TDI.”
If a small deduction on your paystub looks unfamiliar, check it against the current rate for your state. It should equal the percentage rate applied to your gross wages for that pay period, up to any applicable cap. Hang on to your final paystub of the year. It shows year-to-date TDI withholding, which you’ll want if you need to verify your W-2 or claim a refund.
What to Do If You Overpaid
Working for two or more employers in the same TDI state during one year is where problems show up. Each employer withholds independently, unaware of what the other took out, and if your combined wages cross the state’s cap, you end up overpaying.
Rhode Island lets you recover the excess by filing form TX-16 with the Department of Labor and Training, along with original W-2s from each employer.11RI Department of Labor and Training. Temporary Disability Refunds Other TDI states have similar refund mechanisms through their state labor or tax agency. Since California removed its wage cap in 2024, this situation no longer arises there.
Federal Tax Treatment
Your TDI contributions and any benefits you receive are treated differently at the federal level. The payroll deductions themselves generally aren’t deductible on your federal return. You pay the TDI tax with after-tax dollars.
Benefits you receive while out on disability are a separate question. If your employer paid the premiums, the IRS generally treats the benefits as taxable income. If you paid the premiums entirely from your own wages, some or all of the benefits may be excludable from federal income, depending on the arrangement. Treatment can also differ between payments from a state fund and payments from an employer-sponsored private plan. The state may issue a 1099-G or similar form reporting what you received, and you’ll want to account for that income when you file.