State Cuts Disability Tax Rate to 50-Year Low

The disability tax rate covering 10.4 million California workers will be reduced in 1997 to its lowest level in 50 years, according to officials in Gov. Pete Wilson’s administration. The rate will drop to 0.5% from 0.8% of the first $31,767 in a worker’s wages. The lower rate means the maximum annual contribution to the disability insurance fund will fall to $159 in 1997 from $254 this year, according to state estimates. The rates were raised substantially after the fund was threatened with insolvency in 1992. State officials credit tighter management of insurance claims as well as the state’s improving economy for the drop in the insurance tax rate.