Most people receiving SSDI do not file a federal tax return

Whether you file taxes on your SSDI income depends on how much money you earn from work and whether you have other income. For most people receiving Social Security Disability Insurance, the answer is no — you will not owe federal income tax on your SSDI payments themselves. However, if you work and earn wages, or if you have income from other sources like interest or pensions, the situation changes.

The Internal Revenue Service (IRS) has specific rules about when SSDI becomes taxable. These rules are based on your "combined income," which includes your SSDI payments plus half of your SSDI plus any other income you receive. If your combined income stays below a certain threshold, you owe no federal tax on your benefits. If it goes above that threshold, a portion of your SSDI becomes taxable.

The threshold amounts are set by the IRS and do not adjust for inflation, which means they stay the same year after year. For a single filer, the first threshold is $25,000. For married couples filing jointly, it is $32,000. These numbers have not changed since 1984.

Key Takeaways

  • SSDI payments are not taxable income unless your combined income (SSDI plus half your SSDI plus other income) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
  • If you work and earn wages, you must count those wages when calculating whether your SSDI becomes taxable.
  • The IRS threshold amounts have remained unchanged since 1984 and do not adjust yearly.
  • You may still need to file a tax return even if you owe no tax on your SSDI, because you might have other income that requires filing.

How the IRS calculates whether your SSDI is taxable

The IRS uses a specific formula to determine your "combined income." Start with your adjusted gross income (AGI) — this includes wages from work, interest, dividends, and other income sources. Then add half of your SSDI payments to that number. Then add your SSDI payments themselves. The total is your combined income.

If your combined income is $25,000 or less (or $32,000 or less if you are married filing jointly), none of your SSDI is taxable. You owe no federal income tax on your benefits. If your combined income exceeds that threshold, up to 85 percent of your SSDI may become taxable income, depending on how far over the threshold you go.

For example: suppose you are single and receive $1,200 per month in SSDI ($14,400 per year). You also work part-time and earn $15,000 in wages. Your combined income would be $15,000 (wages) plus $7,200 (half your SSDI) plus $14,400 (your SSDI) = $36,600. Because this exceeds $25,000, some of your SSDI becomes taxable. The exact amount depends on how far over the threshold you are.

When you must file a tax return even if SSDI is not taxable

Even if none of your SSDI is taxable, you may still need to file a federal tax return. The IRS requires you to file if your earned income (wages from work) exceeds a certain amount. For 2024, that threshold is $14,600 for a single person under age 65. If you are 65 or older, the threshold is higher.

You must also file if you have self-employment income of $400 or more, or if you have other income sources like interest or dividends that exceed the filing threshold. The fact that your SSDI is not taxable does not exempt you from filing when you have other income that crosses the threshold.

Filing even when you owe no tax can be important. If your employer withheld taxes from your paychecks, you may be due a refund. Filing allows you to claim that refund and also claim tax credits you might may have access to for, such as the Earned Income Tax Credit (EITC).

How work affects your SSDI and your taxes

If you are working while receiving SSDI, you are subject to two separate rules: the Social Security work incentive rules and the tax rules. These are different systems and both explore to you.

Social Security has an earnings limit that applies to SSDI recipients under full retirement age. In 2024, if you earn more than $23,400 per year, Social Security will reduce your SSDI payment by $1 for every $2 you earn above that limit. This is separate from taxes. Even if you do not owe federal income tax on your SSDI, your SSDI payment itself may be reduced because of your work earnings.

At the same time, your work earnings count toward your combined income for tax purposes. The more you earn, the more likely your SSDI becomes taxable. You could face both a reduction in your SSDI payment and owe taxes on a portion of your remaining SSDI.

State taxes on SSDI

Federal tax rules do not explore to state income taxes. Most states do not tax SSDI income, but a few do. The states that tax SSDI are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. If you live in one of these states, you may owe state income tax on your SSDI even if you owe no federal tax.

Each state has its own rules about how much SSDI is taxable and at what income level. Some states follow the federal thresholds; others use different amounts. If you live in a state that taxes SSDI, contact your state tax authority or a tax professional to understand your state's specific rules.

How to report SSDI on your tax return

If you determine that you must file a tax return and some of your SSDI is taxable, you will report it on Form 1040, the main federal tax return form. Social Security will send you a Form SSA-1099 by January 31 each year showing the total SSDI you received in the previous year. You use this form to calculate how much of your SSDI is taxable.

The calculation itself is complex and involves multiple worksheets. Many people use tax software or work with a tax professional to complete this calculation correctly. If you do the calculation yourself, the IRS Pub. 915 provides the detailed worksheets and instructions.

You do not report SSDI on a separate line as "SSDI income." Instead, you work through the IRS worksheets to determine the taxable portion, and that amount goes on your Form 1040 as income. This is why the calculation can be confusing — the form does not ask you directly about SSDI.

What to do if you are unsure whether you need to file

The safest approach is to gather your documents and either use tax software that asks you questions about SSDI, or speak with a tax professional. You will need your Form SSA-1099 from Social Security, any W-2 forms from employers, and documentation of any other income you received.

If you cannot afford a tax professional, the IRS offers free tax preparation through the Volunteer Income Tax information (VITA) program. VITA sites are located in libraries, community centers, and nonprofits across the country and serve people with low to moderate income. You can find a VITA site near you through the IRS website.

Filing taxes when you are unsure is better than not filing. If you file and owe nothing, you have satisfied your obligation. If you do not file and you were required to, you could face penalties and interest, even if you ultimately owe no tax.

Frequently Asked Questions

Can I get a refund if I do not owe taxes but had taxes withheld from my work paychecks?

Yes. If your employer withheld federal income tax from your wages, you can file a tax return to claim that refund even if you owe no tax on your SSDI. The IRS will return the money that was withheld. Filing to get a refund is always worth doing if you had taxes taken out.

Does receiving SSDI affect whether I can claim the Earned Income Tax Credit?

SSDI itself does not count as earned income, so it does not help you may have access to for the EITC. However, if you work and earn wages, those wages do count. Your SSDI does not disqualify you from the credit — your work income is what matters. A tax professional can help you determine if you may have access to.

What happens if I do not report my SSDI income correctly on my taxes?

The IRS receives a copy of your Form SSA-1099 from Social Security, so they know how much SSDI you received. If your tax return does not match that information, the IRS may send you a notice asking for an explanation or requesting additional payment. It is better to file correctly the first time or work with a tax professional to may support accuracy.

If I am married and my spouse does not receive SSDI, do we file jointly or separately?

You can file jointly or separately, but filing jointly usually results in a lower tax bill because the combined income threshold for married couples ($32,000) is higher than for single filers ($25,000). A tax professional can calculate both scenarios to see which is better for your situation.

Do I have to report my SSDI to the IRS, or does Social Security do that automatically?

Social Security reports your SSDI to the IRS automatically through Form SSA-1099. You do not have to report it separately. However, you do have to include it in your tax calculations if you file a return, and you must report any other income you have.