Insurance brokers: Help your clients with answers to their important questions about NY SDI benefits.
As an insurance broker serving New York State and beyond, you probably have clients with questions about filing claims for required disability insurance or paid family and medical leave. As your full-scale, white-glove insurance wholesaler, The DBL Center seeks to provide you with the information you and your clients need when it comes to writing policies, filing claims, and even understanding tax ramifications of filing a DBL claim in New York State.
First, let’s provide an overview of NY state SDI (state disability insurance), called DBL in New York and governed by New York’s Disability Benefits Law enacted in 1949.
NY SDI Meaning: What Is NY SDI?
New York State Disability Insurance, often called NYS DBL (Disability Benefits Law) is statutory short term disability coverage for employees suffering an illness or injury incurred off the job. A new parent recovering from childbirth may also qualify for disability insurance benefits in addition to claiming paid family leave benefits to take time off to bond with the new child.
Eligible employees cannot claim DBL and PFL concurrently, however, a parent who just gave birth can take PFL after exhausting SDI benefits or in lieu of DBL.
Full-time employees can qualify for disability coverage after working four consecutive weeks at their current employer. If the worker had a gap of less than four weeks since they were last employed and received coverage through a different employer, there is no gap in coverage; SDI benefits can kick in immediately with the new employer.
Part-time employees are eligible for disability coverage on the 25th day of employment. If they were previously covered within the past four weeks by a different employer, eligibility kicks in immediately. Payroll deductions for both full- and part-time employees begin on day one of employment.
NYS DBL Premiums and Payments for 2025
NYS DBL rates and premiums for 2025 remain the same as they were in 2024. Employers can deduct up to 0.50% of an employee’s weekly wage, up to 60 cents per week, for DBL premiums. An employee’s contribution cannot exceed the total premium amount due. Premium deductions for DBL are made with pre-tax dollars. Employer-paid premiums are considered non-taxable income. Disability payments equal 50% of an employee’s average weekly wage up to $170 per week, for up to 26 weeks.
New York SDI Tax
NY SDI benefits are taxable at the federal and state level. Unlike taxes on PFL in NY, where employees must file paperwork to have FICA (payroll) taxes withheld, FICA taxes are withheld automatically from DBL benefits. Employees will see their DBL benefits reflected on their W2 form in box 14, listed as NYSDI (state disability insurance).
As a knowledgeable insurance broker, you don’t want to provide tax advice to clients. However, you can recommend that claimants speak to a qualified tax accountant, IRS enrolled agent, or another qualified tax professional regarding the income tax ramifications of collecting disability benefits in New York State.
Why Enriched DBL Makes Sense
In early 2024, New York State Governor Kathy Hochul’s proposal to increase DBL benefits did not pass. The legislation would have increased DBL payouts to rival PFL benefits, phasing in benefits increases through 2029. Since the legislation did not pass in the most recent budget, enriched DBL coverage through a private carrier remains more important than ever.
Enriched DBL provides benefits of up to 60% of an employee’s salary, up to $850 per week. Plus, claimants receive flexible payments in the form of a check or ACH direct deposit, just like a paycheck. Plus, if you or a client ever need help filing a claim, have questions about a claim, or experience delays receiving benefits, The DBL Center is your white-label back-office staff, ready to assist.
FAQs
Find out what people are asking about NY-SDI and federal taxes.
What qualifies for disability in New York state?
You may qualify for disability benefits in New York State if you have a medical condition or have suffered an injury or illness that was incurred off the job. Pregnant people can take leave disability leave prior to childbirth and also in the weeks following childbirth. You cannot take PFL and DBL leave concurrently, however.
What does SDI mean on my W2?
SDI stands for State Disability Insurance. If you live in New York and see SDI in box 14 on your W2, this indicates the SDI premiums withheld from your paycheck throughout the year. If you filed a disability claim during the year, that income will be reported as non-wage income on your W2.
What is NY SDI tax?
NY SDI tax stands for State Disability Insurance tax, which covers New York’s DBL coverage. DBL benefits pay 50% of an employee’s average weekly wage, up to $170 per week, for 26 weeks if an employee is unable to work due to an illness or injury incurred off the job, which is not covered by worker’s compensation.
Why am I paying NY SDI tax?
NY SDI tax helps fund the NYSIF to provide disability benefits for part-time and full-time employees who incurred an off-the-job illness or injury.
How does the NY SDI calculation work?
Premium payments for New York State DBL insurance, or NY SDI, equal 0.50% of an employee’s wages, not to exceed 60 cents per week. Any additional amounts must be covered by the employer. Employers can opt to cover the full amount of NYS DBL coverage or a portion of the premium. Disability benefits equal 50% of an employee’s average weekly wage, not to exceed $170 per week.