Tax Increase Coming for Millions of Californians on Jan. 1

Published on December 30, 2023

A California law that aims to provide more generous short-term disability and family leave benefits will take effect Jan. 1, increasing taxes for middle-class families and high-income earners. “California: Democratic politicians have a Christmas present for you. A middle-class tax hike,” Assemblyman James Gallagher (R-Yuba City) wrote Dec. 11 on X, formerly known as Twitter. Senate Bill 951, passed in 2022, removed the earnings limit and maximum contribution for the state’s disability insurance tax—better known as SDI withholdings—starting in 2024 to fund expanded benefit payouts set to begin in 2025. SDI taxes—determined annually by the Legislature and the state’s Economic Development Department—were previously capped with 2023 maximum contributions of around $1,400, and those earning more than $153,000 were exempt from paying the tax on the higher earnings....

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