Higher Payroll Taxes Will Shrink Your 2025 Paycheck

The CA SDI tax is increasing. Wealthy taxpayers will also pay more Social Security tax.

2025 CALIFORNIA SDI TAX

Starting in 2024, all California wages paid were subject to the state disability insurance (SDI) tax. In the past, SDI tax had a maximum cap.

For 2025, the SDI withholding rate increases to 1.2% (up from 1.1% in 2024)

As a reminder this tax is paid by employees and deducted from their paycheck and employers pay nothing.

2025 Social Security Tax

As usual the wage base for the 6.2% Social Security tax will increase. (FYI: The 1.45% Medicare tax is imposed on all wages) 

The 2025 social security wage base will be $176,100, which is an increase of $7,500.

The 2025 maximum social security tax employees and employers will each pay in is $10,918.20, an increase of $465.