VPDI on a W-2 stands for Voluntary Plan Disability Insurance. It is the amount your employer withheld from your wages for a private disability insurance plan that takes the place of California’s State Disability Insurance for your job.1Franchise Tax Board. Help with refunds – Section: Want to get a refund of excess SDI?2California Legislative Information. California UIC § 3252 You will usually find it in Box 14 (sometimes labeled 14a), which employers use for informational entries.
What the Line Actually Represents
Your employer has adopted a private plan to cover short-term disability and paid family leave instead of routing your contributions to the state fund.3California Legislative Information. California UIC § 3254 The money is held in a private trust or paid to an insurance carrier rather than to a state-managed pool.4California Legislative Information. California UIC § 3261 The coverage you get in return is for non-work-related illness or injury and family leave, the same categories the state program covers.
By law, the plan has to give you rights greater than the public SDI and Paid Family Leave programs would.3California Legislative Information. California UIC § 3254 So the entry on your W-2 is not an extra tax. It is the same obligation, redirected.
You Are Not Paying SDI on Top of This
VPDI and SDI work as substitutes. If you contribute to a voluntary plan for a job, you are exempt from paying into the public State Disability Insurance fund for that same job.2California Legislative Information. California UIC § 3252 That is why you will typically see VPDI on a W-2 in place of the more common CASDI line, not alongside it. The private plan is also the entity that will process any claim you file and pay any benefit you receive.
How the Amount Is Calculated
The withholding for a voluntary plan cannot exceed what would have been withheld under the state fund.5California Legislative Information. California UIC § 3260 The state contribution rate is 1.1 percent for 2024 and 1.2 percent for 2025.6Employment Development Department. Contribution Rates, Withholding Schedules, and Meals and Lodging Values Multiply that rate by your subject wages and you have the ceiling for what your employer can take out for VPDI.
One change matters for higher earners. For wages paid on or after January 1, 2024, California eliminated the taxable wage limit for disability insurance contributions.7California Legislative Information. California UIC § 9858Franchise Tax Board. What’s New with Tax Forms – Section: SB 951 – State Disability Insurance All of your wages are now subject to the withholding, no matter how high your salary goes. Before this change, withholding stopped once you hit an annual earnings threshold.
What VPDI Means at Tax Time
On your federal return, if you itemize, you can generally include required contributions to state benefit funds among your deductible state and local taxes, subject to the SALT limit.9Internal Revenue Service. Topic no. 503, Deductible taxes The IRS may treat private plan contributions differently from mandatory payments to a public state fund, so check current guidance before deducting a VPDI amount as a state tax.
On your California return, the treatment has changed. Because the wage cap is gone starting in 2024, the state has also removed the line for claiming a credit for excess disability insurance withholdings. For tax year 2024 and later, you cannot claim a credit for excess VPDI or SDI withholding, because there is no longer a maximum on how much can be withheld from your total wages.8Franchise Tax Board. What’s New with Tax Forms – Section: SB 951 – State Disability Insurance The excess-withholding refund that some workers used to claim through this credit no longer exists for these years.