On January 1, 2026, both the Social Security taxable wage base and California’s state disability insurance (SDI) withholding rate will increase.
For 2026, the federal Social Security Administration (SSA) announced the maximum amount of earnings subject to the Social Security tax — also known as the Social Security taxable wage base — will increase to $184,500 (up from $176,100, a 4.8 percent increase). The Social Security withholding rate is will remain at 6.2 percent, up to the maximum taxable amount. The Federal Insurance Contributions Act (FICA) tax rate — which combines the Social Security tax rate and the 1.45 percent Medicare tax rate — also remains unchanged at 7.65 percent.
In addition, individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly) will pay an additional 0.9 percent in Medicare taxes, which is not included in the above tax rates. There is no base limit on the amount of wages subject to the Medicare tax.
In California, SDI is a partial wage-replacement insurance plan for eligible California workers, which is state-mandated and funded through employee payroll deductions. California’s SDI program provides short-term disability insurance and Paid Family Leave (PFL) wage replacement benefits to eligible workers who need time off work. Employers do not directly fund either SDI or PFL.
For 2026, the SDI withholding rate for employees will increase to 1.3 percent (up from 1.2 percent in 2025). As of January 1, 2024, employees subject to SDI contributions no longer have a taxable wage limit or maximum withholding. The SDI withholding rate is the same for all employees and is calculated annually.
Katie Culliton, Senior Editor, CalChamber
HRCalifornia members can read more about Standard Deductions: Taxes in the HR Library. Not a member? Learn more about how HRCalifornia can help you.
