An employee earning $65,000 annually in California has how much SDI withheld from their wages, assuming a 0.9% SDI rate and wage cap of $153,164?
Correct Answer
C) $585.00
SDI withholding = $65,000 × 0.009 = $585.00 annually. Since the wage is below the cap, the full rate applies to the entire salary.
Why This Is the Correct Answer
SDI is calculated by multiplying the employee's total wages by the SDI rate: $65,000 × 0.009 = $585.00. Because $65,000 is well below the $153,164 wage cap, the full annual salary is subject to the rate and no cap adjustment is needed.
Why the Other Options Are Wrong
Option A: $468.00
$468.00 results from applying an incorrect rate of approximately 0.72% instead of 0.9%, or from using a lower base wage. It does not reflect the correct SDI calculation.
Option B: $1,378.48
$1,378.48 would result from applying the SDI rate to the wage cap ($153,164 × 0.009 ≈ $1,378.48). This is the maximum possible SDI withholding, but it only applies to employees who earn at or above the wage cap — not someone earning $65,000.
Option D: $650.00
$650.00 results from applying a 1.0% rate ($65,000 × 0.01) rather than the stated 0.9% SDI rate. Always use the rate specified in the question.
Memory Technique
Think of SDI as '9 cents on every $10 earned' (0.9%). For $65,000: multiply $65 (in thousands) × $9 = $585. If the wage exceeds the cap, use the cap instead — but here $65K < $153K cap, so use the full salary.
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