Are short term disability benefits taxable by the state in the State of CA? I've read that State Disability Benefits paid by the State of CA are not taxable by the State. In my case, my employer offers their own short term disability plan (as allowed in the state of CA). Both their and my contributions are made with pre-tax dollars - so for my federal taxes, they are taxable. But the State of CA exempts short-term disability benefits from state taxes - would that also apply to the short term plan offered by my employer? The confusion begins here with the State of CA's tax page discussing state taxes on short-term disability. http://www.taxes.ca.gov/specialind.html#Disability

Benefits from the California state disability program which are fully paid for by the employee with after-tax dollars are not taxable. However, benefits from employer-sponsored plans that are employer-paid or paid with pre-tax dollars are taxable.