This article explains how non-impounded taxes work for U.S. Payroll, when they apply, and what clients need to do. These taxes are typically tied to state-mandated disability or family leave programs and are not filed or paid by Deel.
Instead, the employer is responsible for managing the insurance billing directly.
In this article:
How non-impounded taxes are processed in Deel
Steps to manage non-impounded insurance plans
What are non-impounded taxes?
Non-impounded taxes are statutory employee contributions that Deel calculates and deducts, but does not remit to the tax authority or insurer on your behalf.
Instead, the funds remain with the employer, who uses them to pay invoices from their insurance provider.
These taxes are most commonly associated with:
State-mandated disability insurance (SDI)
Family leave insurance (FLI)
Privately administered insurance plans
Currently, Deel supports the following non-impounded taxes:
Hawaii State Disability Insurance (HI SDI)
New York State Disability Insurance (NY SDI)
New York Family Leave Insurance (NY FLI)
How non-impounded taxes are processed in Deel
During each payroll run:
Deel calculates the required contribution amounts for eligible employees.
Contributions are deducted from employees’ net pay.
The collected amounts are retained by the employer.
These amounts are then used by the employer to pay invoices from their private insurance provider, which acts as the plan administrator.
Please note that the Employee contributions are optional. If your business chooses to fully fund these programs, you can request Deel to turn off employee deductions by contacting Support.
Tax reporting
Deel reports these employee contributions in Box 14 of the employee’s federal and state W-2 forms.
Steps to manage non-impounded insurance plans
✅ Step 1 - Identify employees subject to these state insurance programs
Check employee locations and eligibility for
Hawaii State Disability Insurance (HI SDI)
New York State Disability Insurance (NY SDI)
New York Family Leave Insurance (NY FLI)
✅ Step 2 - Obtain an approved private insurance plan
You can work with any insurance company authorized by the respective state.
✅ Step 3 - The insurer (administrator) will invoice you directly
Billing frequency and amount will depend on the plan you’ve purchased.
✅ Step 4 - Use funds collected through payroll to pay the invoice.
The employee contributions collected by Deel remain with you and can be used toward these payments.
Please note that Deel does not handle plan enrollment, invoice processing, or payments to the insurer. This must be managed by your internal team.
Frequently Asked Questions
[ACCORDION] Where can I find these contributions on employee tax forms?
They are reported in Box 14 on the W-2 forms.
[ACCORDION] What if I want to cover the full cost without employee contributions?
Contact Deel Support to disable employee deductions for these taxes.
[ACCORDION] Who is the plan administrator?
The administrator is the insurance company through which you purchase the plan, not Deel or the state.
[ACCORDION] Can Deel help me choose an insurance provider?
Deel does not provide or recommend insurance plans. You’ll need to contract directly with a state-approved provider.