Payroll Taxes

Learn more about keeping your business compliant with payroll tax requirements.

Disability Insurance Payroll Tax Obligations by State

Employers doing business in California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island may be required to withhold and/or pay taxes for mandated-disability insurance programs.

States that are not listed above do not impose the disability insurance payroll tax. Typical disability insurance obligations include:

  • A short description of the employment level required to subject you to the state's tax
  • The tax rate, if any, applied when employers are personally liable for paying the state tax
  • The rate at which the tax is withheld from employees' wages
  • The maximum wage amount to which the state's tax applies
  • The agency that administers the state's tax

Employers may choose to offer disability benefits to employees who are out of work because of an accident or illness. Most importantly, the illness or injury does not have to be work-related. Long-term and short-term disability policies are the two general categories of optional disability benefits.

  • Short-term. Short-term disability policies are private policies that you can buy for your employees. Short-term disability insurance is designed to provide income to employees who become disabled due to sickness or an accident and are unable to work after an initial waiting period (generally, one to seven days).
  • Long-term. Long-term disability policies take up where short-term policies leave off, covering employees who become disabled and unable to work for longer periods of time (generally six months or longer).

For a detailed summary about disability insurance payroll tax requirements, we have the following article: Optional and Required Disability Insurance Benefits for Your Employees

If you are looking for disability insurance payroll tax laws specific to your state or jurisdiction, please visit the respective secretary of state or department of labor site. 

Category : Payroll Taxes
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